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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE
           ACT OF 1934.
</TABLE>

                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1999
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE
           ACT OF 1934.
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER: 0-27280

                            ------------------------

                                META GROUP, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
               DELAWARE                            06-0971675
    (State or other jurisdiction of             (I.R.S. Employer
    incorporation or organization)             Identification No.)

208 HARBOR DRIVE, STAMFORD, CONNECTICUT            06912-0061
    (Address of principal executive                (Zip Code)
               offices)
</TABLE>

       Registrant's telephone number, including area code: (203) 973-6700

        Securities registered pursuant to Section 12(b) of the Act: NONE

          Securities registered pursuant to Section 12(g) of the Act:

                          COMMON STOCK, $.01 PAR VALUE
                                (Title of class)

                            ------------------------

    Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

    The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 20, 2000 (based on the closing price as quoted by Nasdaq
National Market as of such date) was $243,644,540.

    As of March 20, 2000, 10,444,083 shares of the registrant's common stock
were outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Company's Proxy Statement relating to the Company's Annual
Meeting of Stockholders to be held on May 24, 2000 are incorporated by reference
into Part III hereof.

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                                     PART I

ITEM 1.  BUSINESS

GENERAL

    META Group, Inc., a Delaware corporation founded in 1989 ("META Group"), and
its subsidiaries, The Sentry Group, Inc. ("Sentry") and MG (Bermuda) Ltd.,
(collectively, the "Company") is an independent market and business process
assessment company. The Company provides research and analysis of developments,
trends and organizational issues relating to the computer hardware, software,
communications and related information technology ("IT") industries and their
impact on the conduct of business to IT users and vendors. IT user organizations
utilize META Group's research, analysis and recommendations to develop and
employ cost-effective and revenue enhancing strategies for selecting and
implementing timely IT solutions and for aligning these solutions with business
priorities. IT vendors use META Group's services for help in product
positioning, marketing and market planning, as well as for internal IT decision
making.

    META Group offers clients annual subscriptions to 16 different research
services ("Research and Advisory Services"). These services are focused on
specific areas of IT, IT issues related to a specific vertical market, or
specific needs of those within the IT organization. Recommendations to clients
are based on projections and analyses of important industry trends, experiences
of other companies, events and announcements, key issues and business practices,
as well as new technologies, products and services.

    The Company also offers strategic consulting ("Strategic Consulting")
services through its consulting division, META Group Consulting ("MGC"). A
significant portion of MGC clients are also Research and Advisory Services
subscribers. The acquisition by the Company of Sentry in October 1998
significantly expanded MGC's business-value consulting practice, and
complimented the existing sourcing, benchmarking, technology application,
e-commerce and other consulting practices within MGC. The Company also offers a
variety of targeted publications as part of its Research Reports product family.
See "Business--Products and Services--META Group Consulting" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

    META Group targets as its clients substantial commercial and governmental
users of IT, as well as IT vendors. As of December 31, 1999, the Company had
over 5,000 subscribers to its Research and Advisory Services in approximately
2,000 client organizations. During each of 1999, 1998 and 1997, approximately
78%, 75% and 75%, respectively, of META Group's clients renewed one or more
subscriptions.

    From time to time, information provided by the Company or statements made by
its employees may contain "forward-looking" information which involve risks and
uncertainties. In particular, the statements set forth under the heading "The
META Group Solution" below regarding the Company's objectives to expand the
range of clients it serves, further penetrate its existing client base, extend
its product line and broaden the scope of its services are "forward looking"
statements. The Company's actual results could differ materially as a result of
various factors, including the level and timing of subscription renewals to
Research and Advisory Services, the level and timing of contracted Strategic
Consulting billing, the integration of new businesses into the operations of the
Company, the timing of production and delivery of Research Reports sold by the
Company, the mix of domestic versus international business, the timing of the
development, introduction, marketing, and market acceptance of new products and
services, the timing of the hiring of research analysts and consultants, the
timing and execution of the Company's strategic plans, changes in the spending
patterns of the Company's target clients, changes in the market demand for IT
research and analysis and strategic consulting services, competitive conditions
in the industry, and other risks and uncertainties detailed from time to time in
the Company's filings with the Securities and Exchange Commission. See
"Management's

                                       2
<PAGE>
Discussion and Analysis of Financial Condition and Results of Operations--Year
2000 Readiness Disclosure" and "--Certain Factors That May Affect Future
Results" for a discussion of certain factors which may cause actual results to
vary significantly from those stated in any forward-looking statement.

    Specific comparative financial information may be found in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and in
the notes to the consolidated financial statements.

    META GROUP-Registered Trademark- is a registered trademark of the Company.
The META GROUP logo-TM-, META-TM-, META DELTAS-TM-, META FAX-TM-, META
FLASH-TM-, and META TRENDS-TM- are trademarks of the Company. This report also
includes trademarks and trade names of companies other than META Group.

INDUSTRY BACKGROUND

    Businesses and other organizations remain dependent on IT for competitive
success, which has led to sustained growth in IT-related expenditures. This
market growth is being driven by many factors, including intensified domestic
and global competition, the Internet and electronic commerce, large-scale
migration from legacy mainframe systems to distributed architectures, the
accelerating pace of technological change, shortened product and business
planning life cycles, outsourcing and widespread business process re-engineering
and corporate downsizing.

    At the same time, the decision-making process involved in the planning,
selection and implementation of IT solutions is growing more complex. Prior to
the emergence of open systems and distributed computing, organizations faced
easier technology choices. Traditionally, IT managers would simply purchase a
vertically integrated solution (hardware, operating system, applications and
services) from one of the large systems vendors. Today, IT decision-makers must
evaluate a variety of new and rapidly evolving products from multiple vendors
and consider the interoperability of these products with one another and with
existing legacy systems.

    As IT has become more entwined with day-to-day business operations and
strategic planning, a wider range of individuals are participating in the IT
decision-making process. With the shift to distributed computing, IT decision
making has spread to individual business units. Furthermore, as IT supports more
business-critical functions and businesses increasingly interact with
customer/suppliers through the Internet/World Wide Web, IT decision-makers at
all levels are becoming key participants in the planning and implementation of
business decisions and are often being called upon to be strategic drivers of
business and technology innovation. As IT assumes a more business-critical role,
senior executives of organizations are compelled to take a more active role in
IT planning and decision making.

    As a result of these trends, there is an increasing need for a level of IT
guidance that often cannot be effectively supported by the internal resources of
a single organization. Organizations are more frequently turning to outside
sources for help with strategic and tactical advice in planning, selecting and
implementing IT; however, historically, available solutions have had significant
limitations. Software and equipment vendors generally offer advice biased toward
their own products or services, while often understating interoperability
issues. Many professional service firms and implementation companies provide
technical advice, but they have incentives to promote solutions that require
their services and often have purchasing and cooperative relationships with
particular hardware and software vendors. Some independent market research firms
provide vendor-neutral advice, but most target technology vendors rather than
the user community. Those market research firms that do target users typically
do not offer advice over a full range of technology offerings. As a result,
there is a need for vendor-neutral, user-focused, broad-based IT market
research, coupled with personalized advice within the specific context of an
organization's business environment and IT requirements.

                                       3
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THE META GROUP SOLUTION

    The Company addresses the growing demand for user-focused guidance by
providing vendor-neutral IT research, analysis and advice to substantial
commercial and certain governmental users of IT. META Group services are also
utilized by IT vendors for help in product positioning, marketing and market
planning as well as for internal IT decision making. META Group Research and
Advisory Services assist clients in making more informed, timely and
cost-effective decisions in the context of the clients' business and technology
environments. Each Research and Advisory service is highly focused on enhancing
the client's ability to reduce and/or contain the cost of IT, reduce risk,
assess vendor business practices and strategies, evaluate products and
technologies, negotiate with vendors, develop financial strategies and formulate
IT architectures and strategic plans.

    META Group differentiates its services from those offered by most other IT
research firms by delivering IT industry coverage through more comprehensive and
integrated service segments, a higher level of personal service and a greater
emphasis on client/analyst interaction. To provide this level of service, the
Company maintains a client/analyst ratio no higher than 50-to-1 in each of its
service segments.

    The Company's research is designed to alert clients to the sometimes subtle
and unforeseen opportunities and risks inherent in complex IT business
decisions. Although META Group research contains concrete conclusions and
recommendations, a client seeking to understand the complex IT issues addressed
in written research often requires further explanation and analysis in the
context of the client's unique business environment and IT requirements.
Accordingly, all META Group Research and Advisory service clients have direct
access to the Company's analysts, who adapt the Company's published conclusions
and recommendations to the client's specific IT environment. META Group analysts
are available to clients through direct telephone consultations, customized
on-site and regional executive briefings and in-depth quarterly and annual
conferences, as well as teleconferences addressing significant current IT
developments.

    META Group believes its proactive involvement in clients' specific IT
problem solving situations enables it to provide actionable advice. META Group
analysts have real-time access to a broad base of current user experience
spanning vertical industries and related technologies. This first-hand practical
knowledge is disseminated throughout the Company at weekly meetings of META
Group's entire research staff. As a result of this interaction and broad
knowledge base, META Group analysts deliver more informed conclusions and
recommendations. META Group believes that its interactive approach provides
significant value to senior management and IT decision-makers by enhancing their
ability to make sound, practical and cost-effective decisions.

    META Group's objective is to leverage its reputation, comprehensive research
model, knowledge base, customer relationships and domestic and international
sales network to expand the range of clients it serves, further penetrate its
existing client base, extend its product line and broaden the scope of its
services.

PRODUCTS AND SERVICES

    META Group's services and products are designed to complement each other and
provide flexible access to the industry's foremost market assessment and
analytical expertise in the following categories:

    - RESEARCH AND ADVISORY SERVICES

    - STRATEGIC CONSULTING

    - RESEARCH REPORTS

                                       4
<PAGE>
RESEARCH AND ADVISORY SERVICES

    META Group's Research and Advisory Services offer actionable research,
unlimited analyst interaction, and on-site consultation with META Group analysts
when clients need to further understand industry trends, vendor assessments, and
the business application of technology solutions--applying analyst insight and
research to their specific set of decision-making opportunities. These services
have been developed to meet the varied needs of client organizations:
technology-focused services (infrastructure, architecture, and applications);
industry-focused services (specific to industries such as energy, insurance, and
healthcare); and senior executive-focused services (such as META Group's
Executive Directions service).

    META Group believes its Research and Advisory Services provide comprehensive
coverage of virtually all relevant IT and business related issues faced by its
clients. META Group applies a consistent approach to all Research and Advisory
Services by offering a high level of personal service with an emphasis on
client/analyst interaction. All META Group Research and Advisory Services
clients have direct access to the Company's analysts as advisors to adapt the
Company's published conclusions and recommendations to the client's specific IT
requirements. Proactively contacting clients on a regular basis, META Group
analysts apply their knowledge base of product information and user experience
to respond to the unique IT situation of each client with incontext, definitive
advice and recommendations.

    The list prices for the Company's Research and Advisory Services range from
$23,000 to $60,000, and are subject to discounts based on a number of factors,
including the number of services subscribed to by a client. The Company's
average selling price for a Research and Advisory Service was $16,700, $17,600,
and $16,600 for the years ended December 31, 1999, 1998, and 1997, respectively.

    The following deliverables, which involve the direct participation of META
Group research analysts, typically are provided to subscribers to META Group's
Research and Advisory Services as an integral part of such services:

    - TELEPHONE CONSULTATIONS afford each subscriber the unlimited opportunity
      to discuss specific issues with META Group analysts.

    - HALF-DAY BRIEFINGS are held at META Group headquarters or at client sites
      and address client-specific issues.

    - STRATEGIC PLAN REVIEWS provide META Group analysis and evaluation of
      clients' strategic plans.

    - META TRENDS TELECONFERENCES are held quarterly by each service to provide
      an in-depth analysis of between two and four of that service's annual META
      Trends (I.E., long-term projections of major industry issues and trends
      that META Group believes will impact users, vendors and the IT market).

    - KEY EVENT TELECONFERENCES enable clients to participate in discussions
      with META Group analysts and are generally held following key industry
      events, such as major announcements or trade shows.

    - META GROUP CONFERENCES & POWER SUMMITS address a broad range of tactical
      and strategic issues relevant to each service. A conference covering
      industry-wide issues is held annually.

    - WRITTEN RESEARCH: Each subscriber to a META Group Research and Advisory
      service receives one or more of the following written materials:

       - META DELTAS consist of three to four analytical briefs, published
         monthly, that deliver analysis of major events, issues, vendor products
         and strategies, technology and other pertinent matters.

                                       5
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       - META FAXES are concise faxed summaries of META Group's weekly research
         meeting, at which industry events are reviewed and analyzed.

       - META TRENDS is an annual publication featuring three to five year
         projections of significant issues and developments that will affect IT
         users and vendors.

       - META FLASH is a faxed bulletin containing analysis of key industry
         events or announcements which META Group deems to be of extraordinary
         importance.

    META Group research is available in print, as well as in the media below. A
rolling three years of research can be searched by service, topic, or keyword.

    - Extranet or Intranet

    - Internet

    - Lotus Notes

    - CD-ROM

    The following is a description of META Group's Research and Advisory
Services:

    APPLICATION DELIVERY STRATEGIES (ADS) is META Group's strategic advisory
service for IT personnel and business technologists responsible for enterprise
application delivery and integration. The principal business rationale for ADS
is the need for access to technology foresight to support customer relationship
management ("CRM") and enterprise application integration initiatives. The scope
of traditional application development has expanded significantly due to the
accelerating pace of business innovation. ADS offers IT organizations guidance
that enables such organizations to meet the demands of business innovation.
ADS's research and analysis emphasizes three key areas: data warehousing,
enterprise business applications and enterprise application development (both
Internet and client/ server).

    ELECTRONIC BUSINESS STRATEGIES (EBS) addresses electronic business issues
across business-to-business, business-to-consumer, and business-to-employee
application spaces. Examining both strategic business aspects of
e-business/e-commerce as well as technical requirements for sell-side commerce,
e-procurement, channel/partner management, content management, portal strategies
and net market participation/creation, EBS offers best practices for
organizations building, buying or sourcing electronic business solutions with an
added focus on the business issues and technology trends faced by organizations
serving and within the retail industry. EBS analysts also focus on knowledge
management/ innovation strategies and technologies, inter-enterprise
collaboration, process automation/optimization and product life cycle
management.

    ENTERPRISE ARCHITECTURE STRATEGIES (EAS) focuses on the needs of senior
level IT professionals and the fundamentals of planning, designing and
implementing an IT architecture that supports the company's growth strategy
while allowing for a quick response to industry changes and advancements. By
identifying the core issues that link business function to IT strategy, EAS
helps clients to build an adaptive IT foundation that sustains a company's
competitive advantage.

    ENTERPRISE DATA CENTER STRATEGIES (EDCS) offers expertise and guidance for
the renovation, revitalization and optimization of legacy systems for inclusion
in rapidly expanding electronic business markets. Clients benefit from in-depth
analysis and insight into the management, organization, operational and
technical factors behind evolving enterprise architectures, logical data
centers, high-volume transaction processing and database systems, and hardware
and software asset management. Particular areas of focus include migration and
implementation strategies, parallel sysplex, Year 2000/Euro compliance, vendor
analysis and business practices and vendor negotiation strategies.

                                       6
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    GLOBAL NETWORKING STRATEGIES (GNS) focuses on the comprehensive range of
issues facing today's networking and telecommunications professionals. Analysts
provide insight into emerging trends in technology, regulation and network-based
applications. Primary areas of concentration include building an Internet
protocol platform to deliver business value, analyzing application
networkability, implementing and operating network management solutions to
substantiate service levels, and handling the organizational issues associated
with planning and running multi-national corporate networks.

    EXECUTIVE DIRECTIONS (ED) provides a forum for senior IT and other business
executives to discuss critical challenges facing their organizations, such as
increasing business' perception of its information dependency and identifying
opportunities to rapidly innovate and leverage new technology.
Membership-directed research topics are discussed at regional and national
meetings and published in monthly research papers. Customized on-site briefings
and one day planning sessions are also provided to focus on client and industry
issues.

    OPEN COMPUTING & SERVER STRATEGIES (OCSS) represents a valuable resource for
organizations building open adaptive infrastructure to support enterprise
applications. Research from OCSS analysts provides interactive, ongoing insight
into the entire spectrum of issues facing enterprise infrastructure developers,
such as server consolidation, migration and integration, enterprise application
integration, storage-area networks, database/warehouse evolution, middleware
architecture and management, and electronic commerce infrastructure.

    IT PERFORMANCE ENGINEERING & MEASUREMENT STRATEGIES (PEMS)provides IT
organizations with the framework and guidance for better business/IT alignment
through enterprise-wide measurement programs. Encompassing IT efficiency and
effectiveness, PEMS assessments use in-depth baselines and benchmarks to show
clients how they compare with peers and best-practice organizations. PEMS
enables IT organizations to lay the groundwork for ongoing improvement and
measurement initiatives.

    SERVICE MANAGEMENT STRATEGIES (SMS) delivers research and analysis focused
on aligning IT and business goals through a complement of best practice IT
strategies, forward-looking IT operating models and pragmatic use of external
service providers. In addition, SMS assists clients in architecting enterprise
systems management, application management and information security processes to
cope with complex infrastructure and business systems. Primary areas of coverage
include networked systems management, customer-support operations, security
(including enterprise architecture security and e-commerce security) and
sourcing strategies (including feasibility studies, vendor negotiation,
benchmarking and management of service providers). SMS analysts pay particular
attention to the organizational, financial and management implications of IT's
increasing role as an internal vendor of services.

    WEB & COLLABORATION STRATEGIES (WCS) provides research and analysis to
assist organizations in developing solutions for customer relationship
management, information management and business collaboration. Areas of focus
include improving individual and business-unit productivity, enhancing customer
interaction and relationship management, supporting the various information
value chains that enhance corporate agility and market competitiveness,
leveraging corporate Internet/intranet web sites and portals as a critical
application model, and optimizing the platforms used by customers and corporate
users to exploit these applications.

    INFUSION PROGRAMS:

    Supplementing the foregoing, during 1998 the Company introduced Infusion, a
program that combines offerings across META Group's Research and Advisory
Services to meet the dynamic needs of an enterprise through focused, topical
programs and workshops and predefined consultative solutions. These programs
have developed as a result of organizations' collective need to rapidly
understand how to implement complex technology-based solutions while meeting the
demands of diverse business units that are evolving at a rapid pace.

                                       7
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    META Group's Infusion programs offer benefits to organizations that face
challenges such as building an adaptive infrastructure, customer relationship
management, operations excellence and commerce chain management. These programs
build on the business-focused analysis from the Research and Advisory Services
by also offering interactive workshops that focus on methodology and skill-based
training to successfully manage a specific business-critical challenge. For
every Infusion program, the Company's Strategic Consulting division developed an
associated team of consultants that can be rapidly deployed to provide hands-on
support to clients who need additional resources for rapid implementation.

    The following is a description of META Group's Infusion programs:

    ADAPTIVE INFRASTRUCTURE STRATEGIES (AIS) design and implement an
infrastructure that facilitates business change and enables organizations to
rapidly adopt new initiatives. Offering best practices and ongoing coaching, the
program tackles both day-to-day and long-term challenges, including working with
application project teams, balancing data and network design trade-offs, driving
standardization/ reuse, and optimizing infrastructure investments. By providing
highly interactive workshops, specialized research and practical models and
methods, the program enables clients to optimize infrastructure costs, increase
quality and improve implementations.

    CUSTOMER RELATIONSHIP MANAGEMENT programs provide strategic guidance and
tactical initiatives for delivering next-generation CRM solutions that maximize
corporate agility in determining the channels and points of interaction among
enterprises, customers and business partners. With interactive workshops,
specialized research and practical models/methods, the program enables clients
to minimize operational costs, increase quality and accelerate time-to-market
for implementations.

    OPERATIONS EXCELLENCE offers expertise in advisory service support,
practical operational experience, and detailed models/methods that transform
existing organizations and service delivery practices into world-class
operations supporting the entire enterprise. The program enables organizations
to optimize total operational costs, increase quality, improve implementations
and aid in investment decisions regarding tools, technologies and external
services.

    COMMERCE CHAIN MANAGEMENT offers significant analyst advice and operational
experience, combined with detailed analytic and decision frameworks, to help
enterprises implement and improve their supply/service chain systems. Focused on
actionable commerce chain management (CCM) strategies and tactics, the program
enables organizations to navigate the complex maze of commerce chain issues and
technologies and to craft a solution that delivers results and return on
investment. With the increasing integration of CCM and e-commerce initiatives,
this program assists clients in achieving CCM excellence.

    RESEARCH AND ADVISORY SERVICES FOR VERTICAL INDUSTRIES:

    - INSURANCE INFORMATION STRATEGIES (IIS) delivers guidance critical for
      managing IT and information in the insurance, healthcare and financial
      services industries. Analysts help clients understand the business drivers
      shaping these industries, translate industry changes into strategic
      business initiatives and define information requirements critical to
      success. Particular emphasis is placed on electronic commerce (including
      e-health), customer/partner relationship management, industry vendors and
      solutions, and emerging financial services and healthcare standards and
      architectures.

    - ENERGY INFORMATION STRATEGIES (EIS) focuses on the IT requirements of
      energy industry participants preparing to compete in a de-regulated
      environment of customer choice where the efficient purchase, production,
      transmission and management of energy requires the use and understanding
      of complex technology systems.

                                       8
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STRATEGIC CONSULTING

    META Group Consulting ("MGC") offers project consulting services that
address clients' business and technology challenges. MGC's Strategic Consulting
offerings target executives at both large end-user (Fortune 1000) organizations
and IT vendors that serve such organizations. Large end-user client
organizations typically use MGC's Strategic Consulting offerings when they need
to achieve a strategic advantage by addressing IT challenges. Such challenges
include the selection, planning and integration of CRM systems; rationalizing
supplier networks while deploying electronic procurement systems; strategic
outsourcing support; adaptive infrastructure planning to effectively use
Internet/intranet technology; and using business intelligence to maximize the
results of an enterprise's Internet strategy. Strategic Consulting projects
leverage the Company's base of consulting expertise in IT with pre-existing
frameworks, resulting in increased effectiveness for client IT organizations and
a closer alignment between clients' business and IT strategies.

    IT vendors also face significant challenges given today's complexities in
customer buying behavior, pressure from external forces (E.G., competition and
regulation), and internal practices that may not be optimized for today's
rapidly changing environment. MGC provides customized offerings targeting the
challenges faced by IT vendors. MGC's services leverage proprietary tools and
methods to address such challenges as vendor market position relative to
customer demands, competitive landscape analysis and partnering and channel
strategies.

    MGC's consulting team combines technological expertise, extensive project
management experience and extensive research resources to assist clients in
developing and implementing strategic IT initiatives. MGC leverages META Group's
research and client relationships by drawing on the expertise of META Group
analysts in all Research and Advisory Service areas, and has developed
complimentary offerings linking Research and Advisory Services and Strategic
Consulting services. These links are based on common models and templates
allowing customers to continue with the Company's services as their need for
more consulting-oriented services increases. MGC prices its projects on a fixed
fee for fixed scope of work basis and leverages its professional staff resources
and reduces risk through the re-use of tools, templates and project methods
across multiple client engagements.

    The acquisition by the Company of Sentry in October 1998 significantly
expanded the Company's business value consulting practice and complimented the
existing sourcing, benchmarking, technology application, e-commerce and other
consulting practices within MGC. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

    The acquisition by the Company of certain assets of The Verity Group, Inc.
in late 1997 has enabled the Company to develop a Customer Management Strategies
practice that offers helpdesk and callcenter consulting and benchmarking
services to its clients.

RESEARCH REPORTS

    META Group's Research Reports offer in-depth analysis of such issues as
e-business, operations excellence, customer relationship management, value
management, commerce chain management, and infrastructure development. These
products help clients gain a more thorough understanding of a single business or
IT issue for reference throughout the decision-making life cycle by providing
information-based research. Research Reports leverage META Group's research and
analysis to understand end-user issues and technology trends, drawing on the
expertise of META Group analysts in all Research and Advisory Service areas.
Research Reports are priced on a per-product basis, gaining incremental leverage
through the aggregation of intellectual property, research and analysis already
existing within the Company's Research and Advisory Services. During 1999, the
Company's Research Reports were expanded to include products containing more
quantitative analysis based on multi-client studies focusing on areas such as
e-business, customer relationship management, operations excellence, value
management, infrastructure development and commerce chain management, as well as
new products that leverage intellectual property, research and analysis
developed by the Company's Research and Advisory Services.

                                       9
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    In February 1996, the Company entered into an exclusive distribution
agreement with Computerwire, plc, a London based publisher of magazines,
newsletters, and product review bulletins for users and suppliers of information
technology. Under the agreement, the Company has the exclusive right to
co-market and distribute certain works of Computerwire in the United States,
Canada, and Latin America. These works include monthly publications on software
product and category reviews, IT finance issues, and IT industry mergers and
acquisitions.

    In April 1996, the Company entered into an exclusive distribution agreement
with CXP International, S.A. ("CXP"), a Paris based company specializing in
gathering, analyzing, publishing, marketing and selling technical evaluations
regarding computer and telecommunication software, and SPEX Research LLC
("SPEX"). Under the agreement, CXP provides SPEX with evaluation kits, which are
publications providing thorough hands-on evaluations and detailed side-by-side
product comparisons to assist in the software product decision making process.
SPEX translates the publications into English and provides additional content
relevant to the United States market. The Company acts as SPEX's distributor and
promotes, markets and sells the evaluation kits worldwide.

    In October 1996, the Company entered into an agreement with Rubin
Systems, Inc. ("RSI"), a provider of IT and software engineering measurement
consulting. Under the agreement, the Company distributes for RSI certain
published research products, primarily the Worldwide Benchmark Report, a
publication presenting facts and trend-line data concerning IT performance and
productivity, budgets and spending, emerging technologies and business
requirements compiled from a worldwide sample of IT organizations. RSI is
wholly-owned by a director of the Company.

    The successful assimilation, marketing and sale of new products are subject
to certain risks and uncertainties. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Certain Factors That May Affect
Future Results--Risks Associated With New Product Development."

RESEARCH AND ANALYSIS

    The Company employs a consistent, disciplined research and analysis
methodology across the Company's Research and Advisory Services. Each Research
and Advisory service has a Service Director who is responsible for implementing
the Company's research and analysis methodology in that service. The development
methodology consists of an iterative process of research, analysis, hypothesis
and testing. Analysts conduct extensive primary research, working with the
Company's user client base, surveying vendors and contacting other sources.
These activities are supplemented with searches of numerous trade, financial and
other third-party source materials compiled in the Company's resource center. A
meeting of the entire META Group research staff is held weekly, at which
findings are presented and scrutinized. From this research, analysts identify
significant patterns and trends, develop assumptions, test hypotheses and arrive
at concrete recommendations and conclusions to provide to clients. META Group
analyst compensation is based in part on meeting monthly publishing deadlines,
as well as proactive client contact.

    The knowledge and experience of the Company's analysts is critical to the
quality of the Company's products and services. To ensure consistency of
positions and analysis across service disciplines, all META Group research is
reviewed by one of the Company's two Co-Research Directors. While varying
opinions and philosophical contention among services and research disciplines
are encouraged, final positions and conclusions are consistent. This practice
ensures that the analytical structure and recommendations presented in the
Company's research better enable the various elements of client organizations to
formulate integrated strategies based on coherent information and analysis.

                                       10
<PAGE>
SALES AND MARKETING

    META Group uses a direct sales force domestically and a network of local
independent sales representative organizations internationally to market and
sell its Research and Advisory Services. The Company's domestic direct sales
force is comprised of 84 field sales personnel located throughout the United
States. In addition, the Company developed a new team of account development
representatives within the marketing department to provide more direct
sales-lead support to the direct sales force. The Company's Research Reports are
sold domestically by a separate internal sales force totaling 22 sales
professionals. In the second half of 1999, the Company integrated the separate
sales and marketing units into a single integrated organization. The Company
anticipates that this realignment will allow the Company to more effectively
meet the needs and deepen its penetration of its client organizations.
Internationally, the Company currently utilizes independent sales representative
organizations selling Research and Advisory Services, Strategic Consulting and
Research Reports in Canada, Europe, the Far East, the Middle East, South America
and South Africa. Under the terms of the Company's international sales
representative agreements, sales representative organizations are assigned
exclusive territories and annual quotas. These international sales
representative organizations also perform selected client service functions, and
bill and collect revenues attributable to international clients. The Company
realizes revenues from the international sales representative organizations at
rates of 40% to 60% of amounts billed to those clients. See "Management
Discussion and Analysis of Financial Condition and Results of
Operations--Certain Factors That May Affect Future Results--Risk Associated With
International Operations" and Notes 1 and 13 to the consolidated financial
statements.

    As of December 31, 1999, the Company had over 5,000 subscribers to its
Research and Advisory Services in approximately 2,000 client organizations
worldwide, and no single client accounted for more than 4% of the Company's
revenues for the year ended December 31, 1999. The Company does not believe it
is the exclusive provider of IT research and advisory services to its clients.

    In March 1995, META Group entered into an exclusive strategic alliance
agreement with First Albany Corporation ("First Albany"), a financial services
firm. The agreement provides for the distribution of the Company's written
research and analysis, in its original form or as customized and expanded by
First Albany, to First Albany's financial services customers, which include many
institutional investors. The agreement restricts the Company from marketing its
services to any broker dealer or sell-side firm offering services similar to
those offered by First Albany. The Company is permitted to market and sell
Research and Advisory Services directly to First Albany customers. This
agreement is annually renewable by First Albany, subject to attainment of
specified minimum revenue targets. The Company recognized $875,000, $750,000,
and $616,500 in revenues from this arrangement in the years ended December 31,
1999, 1998, and 1997, respectively. A director of the Company is also Chairman
and Co-Chief Executive Officer of First Albany. See Note 12 to the consolidated
financial statements.

CLIENT SUPPORT

    META Group is committed to providing a high level of client service as
defined by response time, clarity of advice and quality of communication. META
Group analysts respond to clients' inquiries and concerns as they arise, and
analyst compensation is based in part on client inquiry response times.
Analysts' regular contact with clients through telephone consultations,
briefings and conferences also provides the Company with feedback which is used
in the enhancement of its services. In addition, the META Group research library
frequently performs supporting client-specific topical searches on particular IT
issues. The Company maintains a key issues database that identifies areas of
particular concern to clients and regularly uses customer satisfaction surveys
to refine and enhance the quality of the services it provides.

                                       11
<PAGE>
    The Company sells Research and Advisory Services pursuant to renewable
one-year subscription agreements, which are generally paid in full at the start
of the subscription period. During each of 1999, 1998 and 1997, approximately
78%, 75% and 75%, respectively, of the Company's client organizations renewed
one or more subscriptions. However, there can be no assurance that the Company
will be able to sustain its client retention rates at historical levels. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Certain Factors that May Affect Future Results--Dependence on
Renewals of Subscription-Based Services."

COMPETITION

    The Company experiences competition in the market for IT research and
analysis products and services and strategic consulting services from other
independent providers of similar services, as well as the internal planning and
marketing staffs of the Company's current and prospective clients. The Company's
principal direct competitor, Gartner Group, Inc., has a substantially longer
operating history, is significantly larger and has considerably greater
financial resources and market share than the Company. The Company also competes
indirectly against other information and consulting service providers, including
electronic and print media companies and consulting firms. The Company's
indirect competitors could choose to compete directly against the Company in the
future. Many of the Company's direct and indirect competitors have substantially
greater financial, information gathering and marketing resources than the
Company. In addition, although the Company believes that it has established a
significant market presence, there are few barriers to entry into the Company's
market, and new competitors could readily seek to compete against the Company in
one or more market segments addressed by the Company's Research and Advisory
Services and Strategic Consulting services. Increased competition could
adversely affect the Company's operating results through pricing pressure and
loss of market share. There can be no assurance that the Company will be able to
continue to compete successfully against existing or new competitors.

    The Company believes that, with respect to both IT research and analysis
products and services and strategic consulting services, the principal
competitive factors are quality of research and analysis applied in the context
of client IT environments, timely delivery of relevant information, client
support and responsiveness, the ability to offer products and services that meet
changing market needs for information and analysis, and price. The Company
believes it competes favorably with respect to each of these factors.

EMPLOYEES

    As of December 31, 1999, the Company employed 567 people, including 290
research analysis and fulfillment personnel (including 221 analysts and
consultants), 153 sales and marketing personnel and 124 administrative
personnel. None of the Company's employees is represented by a collective
bargaining arrangement, and the Company has experienced no work stoppages. The
Company considers its relations with its employees to be good. Employees are
generally granted stock options upon hiring.

    The Company's future success depends in large part on the ability to
continue to motivate and retain highly qualified employees, including management
personnel, and to attract and retain a significant number of additional
qualified personnel, including research analysts, consultants, sales personnel
and product development and operations staff. Competition for qualified
personnel in the Company's industry is intense, and many of the companies with
which META Group competes for qualified personnel, including Gartner Group, have
substantially greater financial and other resources than the Company.
Furthermore, competition for qualified personnel can be expected to become more
intense as competition in the Company's industry increases. There can be no
assurance that the Company will be able to recruit, retain and motivate a
sufficient number of qualified personnel to compete successfully. The loss of
any of the Company's senior management personnel, particularly Dale Kutnick,
President, Chief Executive Officer and Co-Research Director of the Company, or
any material

                                       12
<PAGE>
failure to recruit, retain and motivate a sufficient number of qualified
personnel would have a material adverse effect on the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Certain Factors That May Affect Future Results--Dependence on
Ability to Attract and Retain Qualified Personnel" and "--Dependence on Key
Personnel."

ITEM 2.  PROPERTIES

    The Company's headquarters are located in approximately 99,000 square feet
of office space in Stamford, Connecticut. This facility accommodates research,
marketing, sales, customer support and corporate administration. The lease on
this facility expires in 2001. The Company also leases office space in nine
other locations to support its research, sales and other administrative
functions including Reston, VA, Burlingame, CA, Pleasanton, CA, Westborough, MA,
Atlanta, GA, and Williston, VT. The Company believes that its existing
facilities are adequate for its current needs and that additional facilities are
available for lease to meet future needs.

ITEM 3.  LEGAL PROCEEDINGS

    The Company is a party to certain legal proceedings arising in the ordinary
course of business. However, the Company believes that none of these proceedings
is likely to have a material adverse effect on the Company's business, results
of operations or financial position.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    No matters were submitted to a vote of the Company's stockholders during the
fourth quarter of 1999.

                                       13
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The Company's Common Stock has been traded on the Nasdaq National Market
under the symbol "METG" since its initial public offering (the "Offering") at
$12.00 per share on December 1, 1995. Prior to the Offering, there was no
established public trading market for the Company's shares.

    On March 20, 2000, the closing price of the Company's Common Stock was
$28.13, as reported by the Nasdaq National Market. On that date, there were
approximately 195 holders of record of the Company's Common Stock and
approximately 1,250 beneficial holders, based on information obtained from the
Company's transfer agent.

    The Company has never paid cash dividends on its Common Stock. Any future
declaration and payment of dividends will be subject to the discretion of the
Company's Board of Directors, will be subject to applicable law and will depend
upon the Company's results of operations, earnings, financial condition,
contractual limitations, cash requirements, future prospects and other factors
deemed relevant by the Company's Board of Directors.

    On April 27, 1998, the Board of Directors of the Company declared a three
for two stock split effected through the issuance of a fifty percent stock
dividend payable on June 11, 1998 to shareholders of record on May 22, 1998.

    The following table reflects the range of high and low bid quotations, as
reported on the Nasdaq National Market, for META Group Common Stock for each
quarter of the years ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
1999:
Fourth Quarter..............................................   $19.00     $13.75
Third Quarter...............................................   $18.63     $12.50
Second Quarter..............................................   $16.88     $ 8.25
First Quarter...............................................   $31.25     $15.38

1998:
Fourth Quarter..............................................   $32.63     $19.00
Third Quarter...............................................   $33.75     $19.62
Second Quarter..............................................   $25.66     $20.31
First Quarter...............................................   $23.66     $14.91
</TABLE>

                                       14
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

    The selected financial data presented below are derived from the
consolidated financial statements of the Company, and should be read in
connection with those statements, which are included herein.

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,
                                                 ----------------------------------------------------
                                                   1999       1998       1997       1996       1995
                                                 --------   --------   --------   --------   --------
                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                              <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
  Research and advisory services...............  $71,524    $58,586    $44,152    $32,667    $23,843
  Strategic consulting.........................   20,844      9,404      5,214      3,714      1,225
  Published research products..................    7,315      4,795      1,829        585        267
                                                 -------    -------    -------    -------    -------
    Total revenues.............................   99,683     72,785     51,195     36,966     25,335
                                                 -------    -------    -------    -------    -------
Operating expenses:
  Cost of services and fulfillment.............   52,224     35,098     24,602     18,908     14,515
  Selling and marketing........................   23,194     16,702     12,477      8,797      6,329
  General and administrative...................    8,356      6,753      5,006      3,728      2,180
  Depreciation and amortization................    2,596      1,894      1,501      1,086        676
                                                 -------    -------    -------    -------    -------
    Total operating expenses...................   86,370     60,447     43,586     32,519     23,700
                                                 -------    -------    -------    -------    -------
Operating income...............................   13,313     12,338      7,609      4,447      1,635
Other income (expense):
  Gain on sale of investment...................                                                  250
  Other income, primarily interest, net........    1,800      2,621      2,138      1,909        198
                                                 -------    -------    -------    -------    -------
Income before provision (benefit) for income
  tax..........................................   15,113     14,959      9,747      6,356      2,083
Provision (benefit) for income tax.............    5,883      6,174      3,980      2,730     (1,547)
                                                 -------    -------    -------    -------    -------
Net income.....................................  $ 9,230    $ 8,785    $ 5,767    $ 3,626    $ 3,630
                                                 -------    -------    -------    -------    -------
Net income per diluted common share............  $   .80    $   .70    $   .48    $   .32    $   .45
                                                 =======    =======    =======    =======    =======
Weighted average number of diluted common
  shares outstanding...........................   11,501     12,596     11,937     11,502      8,121
                                                 -------    -------    -------    -------    -------
Net income per basic common share..............  $   .86    $   .78    $   .53    $   .41    $   .75
                                                 =======    =======    =======    =======    =======
Weighted average number of basic common shares
  outstanding..................................   10,719     11,326     10,821      8,925      4,815
                                                 =======    =======    =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                 ----------------------------------------------------
                                                   1999       1998       1997       1996       1995
                                                 --------   --------   --------   --------   --------
                                                                    (IN THOUSANDS)
<S>                                              <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................  $10,106    $ 9,945    $12,910    $19,335    $35,525
Marketable securities..........................    6,253     36,881     27,746     15,684
Working capital................................   18,224     33,989     32,826     28,843     27,676
Total assets...................................  113,450    112,187     89,453     70,171     52,356
Deferred revenues..............................   42,111     31,276     29,136     22,885     16,557
Total stockholders' equity.....................   61,685     72,690     55,400     42,728     31,868
</TABLE>

                                       15
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

    META Group is an independent market assessment company providing research
and analysis of developments, trends and organizational issues relating to the
computer hardware, software, communications, and related information technology
industries to IT users and vendors. IT user organizations utilize META Group's
research, analysis and recommendations to develop and employ cost-effective and
revenue enhancing strategies for selecting and implementing timely IT solutions
and for aligning these solutions with business priorities. IT vendors use META
Group's services for help in product positioning, marketing and market planning,
as well as for internal IT decision making.

    The Company has three operating business segments: Research and Advisory
Services, Strategic Consulting and Research Reports. The Research and Advisory
Services segment provides annually renewable subscription services (focused on
specific areas of IT, IT issues related to a specific vertical market, or the
specific needs of those within the IT organization), service analyst briefing
engagements and conferences. Supplementing the Company's Research and Advisory
Services is the Company's Infusion program, which builds on the business-focused
analysis of Research and Advisory Services by offering interactive workshops
that provide methodology and skill based training needed to successfully manage
specific business-critical issues. The Strategic Consulting segment provides
strategic consulting engagements addressing clients' business and technology
issues. A significant portion of MGC clients are also Research and Advisory
Services subscribers. The Research Reports segment provides reports, studies,
and surveys offering in-depth analysis of specific business or IT issues.

    Research and Advisory Services subscriptions, which are annually renewable
contracts and generally payable by clients in advance, comprised approximately
72% and 80% of the Company's total revenues for the years ended December 31,
1999 and 1998, respectively. Billings attributable to the Company's Research and
Advisory Services are initially recorded as deferred revenues and then
recognized pro rata over the contract term. During each of 1999, 1998, and 1997,
approximately 78%, 75% and 75%, respectively, of the Company's clients renewed
one or more subscriptions; however, this client retention rate is not
necessarily indicative of the rate of retention of the Company's revenue base.

    Research and Advisory Services revenues attributable to international
clients are billed and collected by the Company's international sales
representative organizations. The Company realizes revenues from the
international sales representative organizations at rates of 40% to 60% of
amounts billed to those clients.

    One measure of the volume of the Company's Research and Advisory Services
business is its annualized "Contract Value," which the Company calculates as the
aggregate annualized subscription revenue recognized from all Research and
Advisory Services contracts in effect at a given point in time, without regard
to the remaining duration of such contracts. While Contract Value is not
necessarily indicative of future Research and Advisory Services revenues,
Contract Value has grown every quarter since the Company's inception and
increased 24% to $81.0 million at December 31, 1999 from $65.4 million at
December 31, 1998. At December 31, 1999, the Company had over 5,000 Research and
Advisory Services subscribers in approximately 2,000 client organizations
worldwide.

    Revenues from Strategic Consulting engagements comprised approximately 21%
and 13% of the Company's total revenues for the years ended December 31, 1999
and 1998, respectively. The Company recognizes revenues on Strategic Consulting
engagements as the work is performed.

    The Company's operating expenses consist of cost of services and
fulfillment, selling and marketing expenses and general and administrative
expenses. Cost of services and fulfillment represents the costs associated with
production and delivery of the Company's products and services and includes the
costs

                                       16
<PAGE>
of research, development and preparation of periodic reports, analyst telephone
consultations, executive briefings and conferences, publications, consulting
services, new product development and all associated editorial and support
services. Selling and marketing expenses include the costs of salaries,
commissions and related benefits for such personnel, travel and promotion.
General and administrative expenses include the costs of the finance and
accounting departments, legal, human resources, corporate IT and other
administrative functions of the Company. See "Segment Reporting" in Note 13 to
the consolidated financial statements for information regarding the Company's
operating segments.

RESULTS OF OPERATIONS

    The following table sets forth certain financial data as a percentage of
total revenues for the periods indicated:

<TABLE>
<CAPTION>
                                                               1999       1998       1997
                                                             --------   --------   --------
<S>                                                          <C>        <C>        <C>
Revenues:
  Research and advisory services...........................     72%        80%        86%
  Strategic consulting.....................................     21         13         10
  Published research products..............................      7          7          4
                                                               ---        ---        ---
    Total revenues.........................................    100        100        100
                                                               ---        ---        ---
Operating expenses:
  Cost of services and fulfillment.........................     52         48         48
  Selling and marketing....................................     23         23         24
  General and administrative...............................      9          9         10
  Depreciation and amortization............................      3          3          3
                                                               ---        ---        ---
    Total operating expenses...............................     87         83         85
                                                               ---        ---        ---
Operating income...........................................     13         17         15
                                                               ---        ---        ---
Other income, primarily interest, net......................      2          4          4
                                                               ---        ---        ---
Income before provision for income tax.....................     15         21         19
                                                               ---        ---        ---
Provision for income tax...................................      6          9          8
                                                               ---        ---        ---
Net income.................................................      9%        12%        11%
                                                               ---        ---        ---
</TABLE>

YEARS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998

    TOTAL REVENUES.  Total revenues increased 37% to $99.7 million in the year
ended December 31, 1999 from $72.8 million in the year ended December 31, 1998.

    Revenues from Research and Advisory Services, which generally are derived
from annually renewable contracts payable by clients in advance, increased 22%
to $71.5 million in the year ended December 31, 1999 from $58.6 million in the
year ended December 31, 1998, and decreased as a percentage of total revenues to
72% from 80%. The increase in revenues from Research and Advisory Services was
principally due to increased subscription revenues as a result of the Company's
expanded domestic sales force and increased client subscriber base, continued
international market acceptance of the Company's Research and Advisory Services,
incremental revenues from the introduction of the Company's Infusion products in
the fourth quarter of 1998, and an increase in analyst briefings to existing
clients. Commencing in 1998 and continuing through 1999, the Company experienced
a shift in business demand by clients towards more focused, client specific
services. As a result, the Company experienced a decline in the growth rate of
Research and Advisory Services revenue from the year ago period, and an increase
in the growth rate of both Strategic Consulting and Research Reports from the
year ago period. The Company currently expects this trend to continue for the
foreseeable future.

                                       17
<PAGE>
    Research and Advisory Services revenues attributable to international
clients increased 30% to $11.7 million in the year ended December 31, 1999 from
$9 million in the year ended December 31, 1998, and increased as a percentage of
Research and Advisory Services revenues to 16% from 15%. The increase in
Research and Advisory Services revenues attributable to international clients
was principally due to continued demand for the Company's Research and Advisory
Services, and, to a lesser extent, incremental revenues from the Company's
Infusion programs. The Company currently has sales representation in 35
countries.

    During 1999, the Company experienced a decrease in the average selling price
of its Research and Advisory Services of 5% to $16,700 from $17,600 in 1998 due
to discounts granted to customers as a result of an increase in the average
number of services subscribed to by clients. The Company grew its subscriber
client base 25% to 5,000 Research and Advisory Services subscribers at
December 31, 1999 from 4,000 at December 31, 1998.

    Strategic Consulting revenues, which result from Strategic Consulting
engagements addressing clients' business and technology issues, increased 122%
to $20.8 million in the year ended December 31, 1999 from $9.4 million in the
year ended December 31, 1998, and increased as a percentage of total revenues to
21% from 13%. The increase was principally due to the incremental revenues from
the acquisition of Sentry in October 1998 as well as a shift in client demand
from Research and Advisory Services towards more focused consulting services.
The Company currently expects continued growth of Strategic Consulting revenue
as a result of the shift in demand by clients toward more focused,
consulting-oriented services.

    Research Reports revenues, which result from the sale of reports offering
in-depth analysis of specific business or IT issues, increased 53% to
$7.3 million in the year ended December 31, 1999 from $4.8 million in the year
ended December 31, 1998, and remained constant as a percentage of total revenues
at 7%. The increase was principally due to expanded product offerings introduced
in 1999, and an increase in sales of Research Reports distributed under the
Company's agreements with CXP International, S.A., SPEX Research LLC, and Rubin
Systems, Inc. (a corporation wholly-owned by a director of the Company). See
Note 12 to the consolidated financial statements for a discussion of Rubin
Systems. The Company currently expects Research Report revenues to grow at a
faster rate than Research and Advisory Services revenues and at a slower rate
than Strategic Consulting revenues.

    COST OF SERVICES AND FULFILLMENT.  Cost of services and fulfillment
increased 49% to $52.2 million in the year ended December 31, 1999 from
$35.1 million in the year ended December 31, 1998. The increase was principally
due to additional analyst and fulfillment costs as a result of the Sentry
acquisition and increased staffing costs (which principally consist of
compensation, and to a lesser extent, travel) for analyst, consultant and
fulfillment positions necessary to support the Company's growth both
domestically and internationally. Additionally, cost of services and fulfillment
increased due to increased royalty payments to third parties with whom the
Company has distribution agreements as a result of increased sales of the
underlying services. Costs of services and fulfillment increased as a percentage
of total revenues to 52% for the year ended December 31, 1999 from 48% a year
ago due to the increase in analyst and consultant headcount that occurred in the
first half of 1999 in order to support the Company's growth both domestically
and internationally and the development of new product offerings to meet
changing customer demands. The Company currently expects continued increases in
costs of services and fulfillment, and it expects that such expenses as a
percentage of total revenue will decrease slightly.

    SELLING AND MARKETING EXPENSES.  Selling and marketing expenses increased
39% to $23.2 million in the year ended December 31, 1999 from $16.7 million in
the year ended December 31, 1998 and remained constant as a percentage of total
revenues at 23%. The increase in selling and marketing expenses was principally
due to increased compensation and travel expenses associated with the expanded
domestic direct sales force and inside sales force that markets Research Reports
to support

                                       18
<PAGE>
the increasing scope of the Company's product offerings and to increase sales
penetration into new and existing client organizations. In addition, the Company
incurred greater marketing expenses, both domestically and internationally, in
connection with the growth of the Company's existing services and conferences,
as well as the launch of its new Infusion programs, Research Reports and
conferences. The Company currently anticipates continuing increases in the
amount of selling and marketing expenses and expects that such expenses as a
percentage of total revenues will increase slightly.

    GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative expenses
increased 24% to $8.4 million in the year ended December 31, 1999 from
$6.8 million in the year ended December 31, 1998 and decreased as a percentage
of total revenues to 8% in 1999 from 9% in 1998. The increase in expenses was
principally due to increased payroll and benefits costs associated with an
increase in administrative personnel and increased facility costs due to the
assumption of additional lease space at the Company's locations necessary to
support the Company's growth. The Company currently anticipates continuing
increases in the amount of general and administrative expenses and expects such
expenses to remain approximately the same as a percentage of total revenues.

    DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expense
increased 37% to $2.6 million in the year ended December 31, 1999 from
$1.9 million in the year ended December 31, 1998. The increase in depreciation
and amortization expense was principally due to purchases of computer equipment,
office furniture and leasehold improvements required to support business growth
and the amortization of goodwill from the Sentry acquisition consummated in
October 1998.

    OTHER INCOME.  Other income decreased 31% to $1.8 million in the year ended
December 31, 1999 from $2.6 million in the year ended December 31, 1998 due to a
reduction in interest income during the year ended December 31, 1999 due to the
decreased levels of cash and marketable securities held by the Company in 1999
versus 1998. Such cash balances and the proceeds from the sale of marketable
securities were used to finance the Company's stock repurchases totaling
$22.5 million during the second quarter of 1999. During 1999, the Company
recognized $268,400 of losses from the sale of marketable securities. The
reduction in interest income was partially offset by an increase in interest
income from advances to investee companies. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and Notes 6 and 7 to the consolidated financial statements.

    PROVISION FOR INCOME TAXES.  The Company recorded a provision for income
taxes of $5.8 million during the year ended December 31, 1999, and $6.2 million
during the year ended December 31, 1998. During the year ended December 31,
1999, the Company decreased its valuation allowance by $1.9 million. Of this
amount, $1.1 million was decreased due to the utilization of net operating loss
carryforwards during 1999. The remaining $800,000 decrease resulted from a
change in federal tax law that will permit the utilization of Sentry's
pre-acquisition net operating losses by the Company. While such losses will be
subject to an annual limitation, the Company believes that it is more likely
than not that such losses will be utilized in full during the carryforward
period. The impact of the takeback of the valuation allowance was partially
offset by increased provisions for state and other income taxes. See Note 9 to
the consolidated financial statements.

YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997

    TOTAL REVENUES.  Total revenues increased 42% to $72.8 million in the year
ended December 31, 1998 from $51.2 million in the year ended December 31, 1997.

    Revenues from Research and Advisory Services increased 33% to $58.6 million
in the year ended December 31, 1998 from $44.1 million in the year ended
December 31, 1997. The increase in Research and Advisory Services revenues was
principally due to continued expansion of the Company's domestic sales force,
recognition of new revenue from the launch of three new services in early 1997,
an increase

                                       19
<PAGE>
in analyst briefings to existing clients, as well as growing international
market acceptance of the Company's products. During 1998, the Company
experienced a shift in business demand by clients towards more focused, client
specific services. As a result, the Company experienced a decline in the growth
rate of Research and Advisory Services revenue from the year ago period, and an
increase in the growth rate of Strategic Consulting and Research Reports
revenues from the year ago period. The Company increased average selling prices
6% to $17,600 in 1998 from $16,600 in 1997 by continuing to broaden research
coverage within its existing Research and Advisory Services. The Company grew
its subscriber client base 17% to 4,000 Research and Advisory service
subscribers at December 31, 1998 from 3,410 subscribers at December 31, 1997.

    Research and Advisory Services revenues attributable to international
clients increased 51% to $8.9 million in the year ended December 31, 1998 from
$5.9 million in the year ended December 31, 1997, and increased as a percentage
of Research and Advisory Services revenues to 15% from 14%. The increase was
principally due to the increased presence of the Company's services in existing
international markets.

    Strategic Consulting revenues increased 80% to $9.4 million in the year
ended December 31, 1998 from $5.2 million in the year ended December 31, 1997.
The increase was principally attributable to an increase in business demand by
clients to include more leveraged consulting services from MGC, and, to a lesser
extent, due to the Sentry acquisition.

    Research Reports revenues increased 162% to $4.8 million in the year ended
December 31, 1998 from $1.8 million in the year ended December 31, 1997. The
increase in Research Reports revenues was principally due to an increase in
sales volume of subscription publications as a result of the introduction of new
products, as well as an increase in sales of publications distributed under the
Company's agreements with CXP International, S.A and SPEX Research LLC and Rubin
Systems, Inc.

    COST OF SERVICES AND FULFILLMENT.  Cost of services and fulfillment
increased 43% to $35.1 million in the year ended December 31, 1998 from
$24.6 million in the year ended December 31, 1997, principally due to increased
analyst, consultant and fulfillment staffing and related compensation and
overhead expense required to support the Company's growth both domestically and
internationally; and, to a lesser extent, to increased royalty payments made in
connection with certain joint product offerings between the Company and certain
entities in which it has a minority investment. Costs of services and
fulfillment remained constant as a percent of revenues at 48%.

    SELLING AND MARKETING EXPENSES.  Selling and marketing expenses increased
34% to $16.7 million in the year ended December 31, 1998 from $12.5 million in
the year ended December 31, 1997 and decreased as a percentage of total revenues
to 23% from 24%. The increase in selling and marketing expenses was principally
due to increased sales-related compensation expense associated with increased
Research and Advisory Services revenues, the expansion of the inside sales force
selling Research Reports, increased costs associated with development of
international markets, and higher marketing and promotion expenditures related
to the launch of new publications and service conference promotion.

    GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative expenses
increased 35% to $6.8 million in the year ended December 31, 1998 from
$5.0 million in the year ended December 31, 1997 and decreased as a percentage
of total revenues to 9% from 10%. The increase in general and administrative
expenses was principally due to increased employee benefits costs, recruiting
fees, internal systems maintenance and facilities, and professional education
costs.

    DEPRECIATION AND AMORTIZATION.  Depreciation and amortization expense
increased 26% to $1.9 million in the year ended December 31, 1998 from
$1.5 million in the year ended December 31, 1997. The increase in depreciation
and amortization expense was principally due to office furnishings and equipment
purchases required to support business growth.

                                       20
<PAGE>
    INTEREST INCOME.  Interest income increased 23% to $2.6 million in the year
ended December 31, 1998 from $2.1 million in the year ended December 31, 1997
due to an increase in the Company's balances of cash, cash equivalents and
marketable securities, resulting from positive cash flows from operations. In
addition the Company benefited from the reinvestment of a portion of its cash
into short-term, higher yield marketable securities

    PROVISION FOR INCOME TAXES.  The Company recorded a provision for income
taxes of $6.2 million and $4.0 million, reflecting an effective tax rate of 41%
during the years ended December 31, 1998 and 1997, respectively. The Company was
not required to pay federal income tax due to the utilization of net operating
loss carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

    The Company has funded its operations to date primarily through its initial
public offering, cash generated from operations, and proceeds from the exercise
of common stock options. In December 1995, the Company received net proceeds
(after deducting underwriting commissions and discounts and applicable offering
expenses) of $30.2 million relating to its initial public offering of 2,790,000
shares of common stock. The Company generated $4.0 million, $9.3 million, and
$8.2 million of cash from operations during the years ended December 31, 1999,
1998, and 1997, respectively, primarily due to net income and the utilization of
net operating loss carryforwards to reduce cash paid for income taxes. The
decrease in cash generated from operating activities was principally due to
decreased cash collections on outstanding accounts receivable, increased
employee bonuses paid in 1999 versus 1998, and an increase in other assets as a
result of an increase of investments in and advances to companies in parallel or
synergistic industries, and partially offset by increases in the Company's
deferred revenue balance at December 31, 1999 versus the same period in 1998.

    The Company used $5.0 million, $3.2 million and $1.9 million of cash in the
years ended December 31, 1999, 1998, and 1997, respectively for the purchase of
furniture, equipment, computers and related software. The Company expects that
additional purchases of equipment will be made as the Company's employee base
grows. As of December 31, 1999, the Company had no material commitments for
capital expenditures; however, the Company is currently upgrading significant
internal systems and its web site to support business growth. The Company
currently anticipates that the total cash outlay for the completion of such
upgrades in 2000 (excluding internal resources) will not exceed $2.0 million.

    On April 14, 1999, the Company's Board of Directors unanimously authorized
the repurchase of up to 1.2 million shares of its common stock in the open
market and in privately negotiated transactions from time to time, depending on
market conditions and other factors. On May 3, 1999, the Company announced the
expansion of the repurchase program to a total of 2.4 million shares. During the
period April 19, 1999 to June 15, 1999, 1,989,993 shares were repurchased at an
average price of $11.28 per share for a total cost of $22.5 million. All shares
repurchased have been retired to the status of authorized but unissued. The
Company financed all repurchases with its cash and marketable securities
balances.

                                       21
<PAGE>
    Additionally, in April 1999, the Company repurchased for approximately
$266,470 in cash 2,389 shares of its common stock and warrants to purchase 2,449
shares of its common stock from a minority stockholder pursuant to the terms of
a Settlement Agreement, dated October 31, 1995, between the stockholder and
Sentry. In April 2000, the Company anticipates repurchasing for approximately
$656,440 in cash approximately an additional 11,000 shares of its common stock
and warrants to purchase 4,899 shares of its common stock pursuant to an
agreement with the minority stockholder. Such repurchase obligation was assumed
by the Company upon the acquisition of Sentry in October 1998. With respect to
the shares and warrants repurchased in April 1999, the fair market value of the
repurchased securities and all associated costs were recovered from a purchase
consideration escrow established for the satisfaction of indemnification claims
pursuant to the terms of the Agreement and Plan of Merger between Sentry and the
Company. Such recovery by the Company was in the form of a release of 15,264
shares of the Company's common stock in April 1999 from the Sentry purchase
consideration escrow. Such released shares were retired to the status of
authorized but unissued. With respect to the shares and warrants the Company
anticipates repurchasing in April 2000, there can be no assurance that the fair
market value of the repurchased securities and the associated costs will be
recoverable from the Sentry purchase consideration escrow.

    Exclusive of its acquisition, during the years ended December 31, 1999, 1998
and 1997, the Company made investments in and advances to several companies in
parallel or synergistic industries. The balance of the Company's investments and
advances was $16.2 million, $8.7 million and $6.4 million at December 31, 1999,
1998, and 1997, respectively. These investments in and advances to are
summarized below, and in Note 6 to consolidated financial statements. Each
investment is accounted for under the cost method. See "Certain Factors That May
Affect Future Results--Risk Associated With New Product Development" and
"--Potential Acquisitions."

    In December 1999, the Company invested $487,000 in Enamics, Inc. ("Enamics")
in exchange for shares of Enamics Series A Cumulative Convertible Preferred
Stock. In addition, the Company advanced $1 million in exchange for a secured
subordinated note, convertible into Enamics' Series A Cumulative Convertible
Preferred Stock. Enamics was established to assist companies define, simulate,
plan and architect e-business initiatives.

    In November 1999, the Company invested $1 million in Ninth House, Inc.
("Ninth House"), in exchange for shares of Ninth House's Series B Convertible
Preferred Stock. Ninth House is a provider of interactive, online learning
content to businesses and individuals utilizing both the Internet and corporate
intranets as delivery platforms.

    In May 1999, the Company advanced $960,000 to Syndicated Research Group
("SRG") in exchange for a subordinated convertible promissory note, convertible
into SRG's Series A Convertible Preferred Stock. SRG is a research and advisory
firm dedicated to helping human resource professionals make business decisions
concerning human capital management issues.

    In March 1999, the Company entered into an agreement to advance
$2.8 million to META Security Group, Inc. ("MSG"), an independent Internet
security consulting firm, in exchange for a secured convertible promissory note,
convertible into MSG's common stock. As of December 31, 1999, the Company had
advanced the full $2.8 million. In July 1999, the Company entered into an
agreement to advance an additional $1 million to MSG in exchange for a secured
promissory note. As of December 31, 1999, $216,000 had been advanced under such
agreement.

    In October 1998, the Company completed the acquisition of all of the
outstanding capital stock of The Sentry Group, Inc. ("Sentry"), an IT consulting
company, for an initial payment of 195,066 shares of common stock and a
contingent payment of up to $7 million in common stock or (at the Company's
option) cash in the event certain financial targets were met by Sentry for 1999.
As of December 31, 1999, the contingent payment of $7 million had been earned
and the Company intends to pay such earned amount principally in stock and, to a
lesser extent, in cash on or about April 30, 2000. The

                                       22
<PAGE>
Company currently anticipates that it will file a registration statement with
the Securities and Exchange Commission to provide for the resale of the
contingent shares on or about April 30, 2000 and the amount of contingent
consideration it intends to pay in cash and all associated costs will be
approximately $500,000. In addition, the Company issued to Sentry stockholders
warrants to purchase up to 200,000 shares of the Company's common stock at
$30.00 per share, 125,000 warrants of which were immediately exercisable and
75,000 warrants which were contingently exercisable upon Sentry achieving
certain financial targets in 1999. Because such financial targets were achieved,
the contingent warrants become fully exercisable. The 125,000 warrants expire in
October 2002. The 75,000 warrants expire four years after the date the Company
pays the contingent consideration. Pursuant to Rule 144 of the General Rules and
Regulations under the Securities Act of 1933, as amended, and depending on the
method used to exercise the warrants, up to 125,000 shares of common stock of
the Company issuable upon the exercise of certain warrants will be deemed to
have been acquired in October 1998. The fair value of the noncontingent
consideration, including acquisition costs, was $5.9 million. The fair value of
the contingent warrants, as well as the $7 million contingent payment, will
increase goodwill when paid. This acquisition was accounted for under the
purchase method. See "Business--Products and Services--Strategic Consulting."

    In October 1998, the Company invested $500,000 in IMT Strategies, Inc.
("IMT") in the form of a loan represented by a secured promissory note
convertible into IMT's common stock. IMT was established to deliver syndicated
research, publications, consulting services, management education and training
focused on the integration of marketing and technology.

    In October 1998, the Company invested $300,000 in Intermedia Group, Inc.
("IMG") in the form of a loan represented by a senior secured promissory note
convertible into IMG's common stock. IMG is an intergrated media and conference
business established to serve markets in a complementary fashion to the
Company's main lines or new lines of business.

    In September 1998, the Company made an investment of $1 million in
Client/Server Labs, Inc. ("CSL"), a supplier of performance and functional IT
testing services, in exchange for shares of CSL common stock. In the first
quarter of 1999, the Company advanced an additional $300,000 to CSL in exchange
for a convertible promissory note convertible into CSL common stock. In
December 1999, the Company exercised its conversion option and received shares
of CSL common stock. In December 1999, all of the outstanding shares of common
stock of CSL were acquired by Tescom Software Systems Testing Ltd. ("Tescom"), a
full service independent IT testing company, in exchange for shares of Tescom
common stock. Pursuant to such acquisition, the Company's shares in CSL were
exchanged for restricted shares of Tescom.

    In August 1998, Spikes Cavell & Company Limited ("SC"), a UK based
corporation, sold its market research database business to Ziff-Davis, Inc. for
up-front cash consideration and contingent performance-based consideration to be
paid through 2002. In September 1999, SC was placed in voluntary liquidation and
the collection of the contingent consideration is being addressed by a licensed
insolvency practitioner and joint liquidator appointed by the creditors
committee. The market research database business supporting the contingent
payment continues to operate as a business unit of Ziff-Davis, Inc.

    The Company regularly invests excess funds in high quality short-term
investments, such as short-term commercial paper and money market funds. As
these investments generally have terms of less than three months, they are
included under the caption "Cash and cash equivalents" in the consolidated
balance sheets.

    In addition, the Company invests in longer term, callable, higher-yield
marketable debt securities. Generally, these securities are U.S. federal
government agency issues, purchased in denominations of $1 million to
$2 million.

                                       23
<PAGE>
    As of December 31, 1999, the Company had cash and cash equivalents of
$10.1 million, marketable securities valued at $6.3 million and working capital
of $18.2 million. The decreases in these assets from December 31, 1998 were
principally due to the share repurchase program and, to a lesser extent, the
strategic investments discussed above. The Company believes that its existing
cash balances, credit facilities and anticipated cash flows from operations will
be sufficient to meet its working capital, strategic investment and capital
expenditure requirements for the foreseeable future.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

    The impact of recently issued accounting pronouncements is discussed in
Note 2 to the consolidated financial statements.

YEAR 2000 READINESS DISCLOSURE

    THE FOLLOWING DISCLOSURE MAY BE DEEMED "YEAR 2000 READINESS DISCLOSURE"
PURSUANT TO THE YEAR 2000 INFORMATION AND READINESS DISCLOSURE ACT.

    To date, the Company has not suffered any significant year 2000 problems or
incurred any material expense related to any such problems. Year 2000 issues may
arise in the future. The Company will continue to monitor the year 2000
compliance and readiness of its systems and those of its suppliers.

    In response to an increase in clients and employees and the need for
improved information management for customer service, the Company implemented a
new client information system during the first half of 1999. In selecting the
new client information system, Year 2000 compliance was one of the criteria
reviewed, and the Company has obtained a representation from the vendor of such
system that the system is Year 2000 compliant. Due to the large amount of
information contained in the old client information system, not all information
was transferred to the new system by the end of 1999. Accordingly, the Company
still uses the existing system for non-critical functions. The Company has
completed the necessary upgrades and obtained representations from the vendor to
ensure the existing system is Year 2000 compliant.

COSTS TO ADDRESS YEAR 2000 ISSUES

    During the year ended December 31, 1999, the Company spent $2.8 million on
the evaluation, testing, modification or replacement of its internal IT or
non-IT software or systems. The Company funded all Year 2000 compliance costs
during the year ended December 31, 1999 from existing working capital.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

    THE COMPANY DOES NOT PROVIDE FORECASTS OF ITS FUTURE FINANCIAL PERFORMANCE.
FROM TIME TO TIME, HOWEVER, INFORMATION PROVIDED BY THE COMPANY OR STATEMENTS
MADE BY ITS EMPLOYEES MAY CONTAIN "FORWARD LOOKING" INFORMATION THAT INVOLVE
RISKS AND UNCERTAINTIES. IN PARTICULAR, STATEMENTS CONTAINED IN THIS FORM 10-K
(AND IN THE DOCUMENTS INCORPORATED BY REFERENCE INTO THIS FORM 10-K) WHICH ARE
NOT HISTORICAL FACTS (INCLUDING, BUT NOT LIMITED TO, STATEMENTS CONCERNING THE
COMPANY'S REALIGNMENT OF ITS SALES AND MARKETING DEPARTMENT, THE SHIFT IN CLIENT
BUSINESS DEMAND AND THE RESULTING IMPACT ON TOTAL REVENUES, THE GROWTH RATES OF
RESEARCH AND ADVISORY SERVICES REVENUE AND REVENUE FROM STRATEGIC CONSULTING AND
RESEARCH REPORTS, GROWTH IN INTERNATIONAL REVENUES, ANTICIPATED COSTS OF
SERVICES AND FULFILLMENT AND OPERATING EXPENSE LEVELS AND SUCH COST AND EXPENSE
LEVELS RELATIVE TO THE COMPANY'S TOTAL REVENUES, ANTICIPATED CAPITAL EXPENDITURE
LEVELS, WORKING CAPITAL INVESTMENT, CAPITAL EXPENDITURE REQUIREMENTS,
ANTICIPATED PAYMENTS IN CASH OR STOCK OF CONTINGENT CONSIDERATION AND STOCK
REPURCHASES RELATED TO THE ACQUISITION OF SENTRY, THE MIX OF CASH AND STOCK THE
COMPANY INTENDS TO USE FOR SUCH PAYMENTS, AND ANTICIPATED INCREASES TO GOODWILL
RELATED TO THE ACQUISITION OF SENTRY) CONSTITUTE FORWARD LOOKING STATEMENTS AND
ARE MADE UNDER THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. THE COMPANY'S ACTUAL RESULTS OF

                                       24
<PAGE>
OPERATIONS AND FINANCIAL CONDITION HAVE VARIED AND MAY IN THE FUTURE VARY
SIGNIFICANTLY FROM THOSE STATED IN ANY FORWARD-LOOKING STATEMENTS. FACTORS THAT
MAY CAUSE SUCH DIFFERENCES INCLUDE, WITHOUT LIMITATION, THE RISKS, UNCERTAINTIES
AND OTHER INFORMATION DISCUSSED WITHIN THIS FORM 10-K (AND IN THE DOCUMENTS
INCORPORATED BY REFERENCE INTO THIS FORM 10-K), AS WELL AS THE ACCURACY OF THE
COMPANY'S INTERNAL ESTIMATES OF REVENUE, OPERATING EXPENSE LEVELS, GROWTH RATES
AND OTHER ANTICIPATED EXPENDITURES.

    THE FOLLOWING RISK FACTORS SHOULD BE READ IN CONJUNCTION WITH THE DETAILED
INFORMATION IN THIS FORM 10-K (AND IN THE DOCUMENTS INCORPORATED BY REFERENCE
INTO THIS FORM 10-K). THE FOLLOWING FACTORS, AMONG OTHERS, COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN FORWARD LOOKING STATEMENTS
CONTAINED OR INCORPORATED BY REFERENCE IN THIS FORM 10-K AND PRESENTED BY
MANAGEMENT FROM TIME TO TIME. SUCH FACTORS, AMONG OTHERS, MAY HAVE A MATERIAL
ADVERSE EFFECT UPON THE COMPANY'S BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.

DEPENDENCE ON RENEWALS OF SUBSCRIPTION-BASED SERVICES

    The Company derived approximately 80% of its total revenues in 1998 from
subscriptions to the Company's Research and Advisory Services. In the year ended
December 31, 1999, the Company derived approximately 72% of its total revenues
from subscriptions to its Research and Advisory Services. Approximately 78% and
75% of the Company's Research and Advisory Service clients renewed at least one
subscription in 1999 and 1998, respectively. The Company, however, may not be
successful in maintaining its subscription renewal rates. Commencing in 1998 and
continuing in 1999, the Company experienced a shift in client demand towards
more consultative, solution-oriented products such as Strategic Consulting
services. With the advent of the Internet, information alone, without analysis
in context of a client's environment, will have less value. In addition to this,
the Company's ability to renew subscriptions is subject to a number of risks,
including the following:

    - The Company may be unsuccessful in delivering consistent, high quality and
      timely analysis and advice to its clients.

    - The Company may not be able to hire and retain a large and growing number
      of highly talented professionals in a very competitive job market.

    - The Company may be unsuccessful in understanding and anticipating market
      trends and the changing needs of its clients.

    - The Company may not be able to deliver products and services of the
      quality and timeliness to withstand competition.

If the Company is unable to successfully maintain its subscription renewal rates
or sustain the necessary level of performance, such an inability could have a
material adverse effect on the Company's business and financial results.

DEPENDENCE ON NON-RECURRING STRATEGIC CONSULTING ENGAGEMENTS

    The Company derived approximately 21% and 13% of the its total revenues
during the years ended December 31, 1999 and 1998, respectively from Strategic
Consulting engagements. The Company currently anticipates continued growth of
revenues from Strategic Consulting engagements. Strategic Consulting engagements
vary in number, size and scope and typically are project based and
non-recurring. The Company's ability to replace completed Strategic Consulting
engagements with new engagements is subject to a number of risks, including the
following:

    - The Company may be unsuccessful in delivering consistent, high quality and
      timely consulting services to its clients.

    - The Company may not be able to hire and retain a large and growing number
      of highly talented professionals in a very competitive job market.

                                       25
<PAGE>
    - The Company may be unsuccessful in understanding and anticipating market
      trends and the changing needs of its clients.

    - The Company may not be able to deliver consulting services of the quality
      and timeliness to withstand competition.

If the Company is not able to replace completed Strategic Consulting engagements
with new engagements, such an inability could have a material adverse effect on
the Company's business and financial results.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

    The Company's operating results have varied significantly from quarter to
quarter. The Company expects future operating results to fluctuate due to
several factors, many of which are not in the Company's control:

    - the disproportionately large portion of the Company's Research and
      Advisory Services subscriptions that expire in the fourth quarter of each
      year;

    - the level and timing of renewals of subscriptions to the Company's
      Research and Advisory Services;

    - the mix of Research and Advisory Services revenues versus Strategic
      Consulting and Research Reports revenues;

    - the number, size and scope of Strategic Consulting engagements in which
      the Company is engaged, the degree of completion of such engagements and
      the Company's ability to complete such engagements;

    - the timing and amount of new business generated by the Company;

    - the mix of domestic versus international business;

    - the timing of the development, introduction and marketing of new products
      and services and delivery methodologies;

    - the timing of the hiring of research analysts, consultants, and sales
      representatives;

    - employee utilization rates and the accuracy of estimates of resources
      required to complete ongoing Strategic Consulting engagements;

    - changes in the spending patterns of the Company's clients;

    - the Company's accounts receivable collection experience;

    - changes in market demand for IT research and analysis and Strategic
      Consulting services; and

    - competitive conditions in the industry.

Due to these factors, the Company believes period-to-period comparisons of
results of operations are not necessarily meaningful and should not be relied
upon as an indication of future results of operations. The potential
fluctuations in the Company's operating results make it likely that, in some
future quarter, the Company's operating results will be below the expectations
of securities analysts and investors, which could have a material adverse effect
on the price of the Company's Common Stock.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

    Net revenues attributable to international clients represented approximately
15% of the Company's total Research and Advisory Services revenues for the year
ended December 31, 1998 and approximately 16% of the Company's total Research
and Advisory Services revenues for the year ended

                                       26
<PAGE>
December 31, 1999. The Company sells its products internationally through a
network of 35 independent sales representative organizations. The Company
assumes significantly greater risk by selling through independent sales
representative organizations than through a direct employee sales force. These
risks to the Company include:

    - greater accounts receivable collection risk (because the Company relies on
      the sales representative organization to invoice and collect receivables);

    - longer accounts receivable collection cycles;

    - the financial health of individual sales representative organizations;

    - developing and managing relationships with sales representative
      organizations;

    - greater difficulty in maintaining direct client contact;

    - fluctuations in exchange rates;

    - political, social, and economic conditions in various jurisdictions;

    - tariffs and other trade barriers; and

    - potentially adverse tax consequences.

    The Company expects that international operations will continue to account
for a significant portion of its revenues and intends to continue to expand its
international operations. Expansion into new geographic territories may require
considerable management and financial resources and may negatively impact the
Company's near-term results of operations. If the Company is unable to
successfully manage the risks associated with international operations, such an
inability could have a material adverse effect on the Company's business and
financial results.

RISKS OF FAILING TO ANTICIPATE CHANGING MARKET NEEDS

    The Company's success depends in part upon its ability to anticipate rapidly
changing technologies and market trends and to adapt its products and services
to meet the changing information and analysis needs of IT users. Commencing in
1998 and continuing in 1999, the Company experienced a shift in client demand
towards more consultative, solution-oriented products such as Strategic
Consulting services. With the advent of the Internet, information alone, without
analysis in context of a client's environment, will have less value. In addition
to this, frequent and often dramatic changes, including the following,
characterize the IT industry:

    - introduction of new products and obsolescence of others;

    - changing client demands concerning the marketing and delivery of the
      Company's products and services;

    - shifting strategies and market positions of major industry participants;

    - paradigm shifts with respect to system architectures; and

    - changing objectives and expectations of IT users and vendors.

    This environment of rapid and continuous change presents significant
challenges to the Company's ability to provide its clients with current and
timely analysis and advice on issues of importance to them. The Company commits
substantial resources to meeting these challenges. If the Company fails to
provide insightful timely analysis of developments and assessment of
technologies and trends in a manner that meets changing market needs, such a
failure could have a material and adverse effect on the Company's future
operating results.

                                       27
<PAGE>
DEPENDENCE ON ABILITY TO ATTRACT AND RETAIN QUALIFIED PERSONNEL

    The Company needs to hire, train and retain a significant number of
additional qualified employees to execute its strategy and support its growth.
In particular, the Company needs trained research analysts, consultants, sales
representatives and product development and operations staff. The Company
continues to experience intense competition in recruiting and retaining
qualified employees. The pool of experienced candidates is small; and, the
Company competes for qualified employees against many companies, including
Gartner Group, that have substantially greater financial resources than the
Company. If the Company is unable to successfully hire, retain and motivate a
sufficient number of qualified employees, such an inability will have a material
adverse effect on the Company's business and financial results.

COMPETITION

    The IT research and analysis and consulting industry is extremely
competitive. The Company competes directly with other independent providers of
similar services and indirectly with the internal staffs of current and
prospective client organizations. The Company's principal direct competitor,
Gartner Group, has a substantially longer operating history and has considerably
greater financial resources and market share than the Company. The Company also
competes indirectly with larger electronic and print media companies and
consulting firms. The Company's indirect competitors, many of which have
substantially greater financial, information gathering and marketing resources
than the Company, could choose to compete directly against the Company in the
future.

    The Company's market has few barriers to entry. New competitors could easily
compete against the Company in one or more market segments addressed by the
Company's Research and Advisory Services or Strategic Consulting services. The
Company's current and future competitors may develop products and services that
are more effective than the Company's products and services. Competitors may
also produce their products and services at less cost and market them more
effectively. If the Company is unable to successfully compete against existing
or new competitors, such an inability will have a material adverse effect on the
Company's operating results and would likely result in pricing pressure and loss
of market share.

RISKS ASSOCIATED WITH NEW PRODUCT DEVELOPMENT

    The Company's future success depends on its ability to develop or acquire
new products and services that address specific industry and business sectors,
changes in client requirements and technological changes in the IT industry. The
process of internally researching, developing, launching and gaining client
acceptance of a new product or service is inherently risky and costly.
Assimilating and marketing an acquired product or service is also risky and
costly. Commencing in 1998 and continuing in 1999, the Company experienced a
shift in client demand towards more consultative, solution-oriented products.
With the advent of the Internet, information alone, without analysis in context
of a client's environment, will have less value. In addition to this, the
Company has introduced few new products or services and has had limited
experience in managing strategic investments. From April 1996 to December 1999,
the Company made investments in and advances to companies in parallel or
synergistic industries totaling $16.2 million. If the Company is unable to
develop new products and services or manage its strategic investments, such
inabilities could have a material adverse effect on the Company's operating
results.

DEPENDENCE ON KEY PERSONNEL

    The Company relies, and will continue to rely, in large part on its key
management, research, consulting, sales, product development and operations
personnel. The Company's success in part depends on its ability to motivate and
retain highly qualified employees. If Dale Kutnick (President,

                                       28
<PAGE>
Chief Executive Officer and Co-Research Director) and/or other senior officers
of the Company leave the Company, such loss or losses could have a material
adverse effect on the Company.

RISK OF PRODUCT PRICING LIMITING POTENTIAL MARKET

    The Company's pricing strategy may limit the potential market for the
Company's Research and Advisory Services and Strategic Consulting services to
substantial commercial and governmental users and vendors of IT. As a result,
the Company may be required to reduce prices for its Research and Advisory
Services and Strategic Consulting services or to introduce new products and
services with lower prices or offered for free over the Internet in order to
expand or maintain its market share or broaden its addressed market. These
actions could have a material adverse effect on the Company's business and
results of operations.

MANAGEMENT OF GROWTH

    Since inception, the Company's operations have changed substantially due to
the expansion and growth of the Company's business. Growth places significant
demands on the Company's management, administrative, operational and financial
resources. The Company's ability to manage growth, should it continue to occur,
will require the Company to continue to improve its systems and to motivate and
effectively manage an evolving workforce. If the Company's management is unable
to effectively manage a changing and growing business, the quality of the
Company's products, its retention of key employees and its results of operations
could be materially adversely affected.

RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS

    As part of its business strategy, the Company buys, or makes investments in,
complementary businesses, products and services. If the Company finds a business
it wishes to acquire, the Company could have difficulty negotiating the terms of
the purchase, financing the purchase, and integrating and assimilating the
employees, products and operations of the acquired business. Acquisitions may
disrupt the ongoing business of the Company and distract management.
Furthermore, acquisition of new businesses may not lead to the successful
development of new products, or if developed, such products may not achieve
market acceptance or prove to be profitable. A given acquisition may also have a
material adverse effect on the Company's financial condition or results of
operations. In addition, the Company may be required to incur debt or issue
equity to pay for any future acquisitions.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    See "Concentration of Credit Risk" in Note 2 to the consolidated financial
statements for information regarding the Company's approach to financial risk
management.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The consolidated financial statements, financial statement schedule and
exhibits listed under Item 14--Exhibits, Financial Statement Schedules and
Reports on Form 8-K are filed as a part of this Annual Report on Form 10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

    None.

                                       29
<PAGE>
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by this item may be found under the sections
captioned "Election of Directors," "Occupations of Directors and Executive
Officers" and "Section 16 (a) Beneficial Ownership Reporting Compliance" in the
Company's Proxy Statement (the "2000 Proxy Statement") for the Company's Annual
Meeting of Stockholders to be held on May 24, 2000, and is incorporated herein
by reference. The 2000 Proxy Statement will be filed with the Securities and
Exchange Commission no later than 120 days after the close of the Company's
fiscal year ended December 31, 1999.

ITEM 11.  EXECUTIVE COMPENSATION

    The information required by this item may be found under the section
captioned "Compensation And Other Information Concerning Directors and Officers"
in the 2000 Proxy Statement, and is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this item may be found under the section
captioned "Management And Principal Holders of Voting Securities" in the 2000
Proxy Statement, and is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this item may be found under the section
captioned "Certain Relationships and Related Transactions" in the 2000 Proxy
Statement, which is incorporated herein by reference, and in Note 12 to the
consolidated financial statements.

                                       30
<PAGE>
                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (a)(1) FINANCIAL STATEMENTS.

    The following consolidated financial statements are included in Item 8 of
this report:

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Independent Auditors' Report................................    F-1

Consolidated Balance Sheets at December 31, 1999 and 1998...    F-2

Consolidated Statements of Income for the years ended
  December 31, 1999, 1998 and 1997..........................    F-3

Consolidated Statements of Changes in Stockholders' Equity
  for the years ended December 31, 1999, 1998 and 1997......    F-4

Consolidated Statements of Cash Flows for the years ended
  December 31, 1999, 1998 and 1997..........................    F-5

Notes to Consolidated Financial Statements..................    F-6
</TABLE>

    (a)(2) FINANCIAL STATEMENT SCHEDULE.

    The following financial statement schedule for the Company is filed as part
of this report:

<TABLE>
<S>                                                           <C>
Schedule II--Valuation and Qualifying Accounts..............    S-1
</TABLE>

    Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
accompanying Consolidated Financial Statements or notes thereto.

    (a)(3) LIST OF EXHIBITS.

    The following exhibits are filed as part of, and incorporated by reference
into this Annual Report on Form 10-K:

<TABLE>
<CAPTION>
           EXHIBIT
           NUMBER           DESCRIPTION
    ---------------------   -----------
    <C>                     <S>
         2.1(1)(2)          Agreement and Plan of Merger by and among META Group, Inc.,
                              MG Acquisition Corporation and The Sentry Group, Inc.
                              dated as of September 23, 1998 ("Agreement and Plan of
                              Merger")

         2.2(1)             Amendment No. 1 to Agreement and Plan of Merger

         3.1(3)             Amended and Restated Certificate of Incorporation of the
                              Company

         3.2(3)             Amended and Restated By-Laws of the Company

         4.1(3)             Specimen certificate representing the Common Stock

         4.2(1)             Registration Rights Agreement dated as of October 20, 1998
                              by and among META Group, Inc. and the stockholders of The
                              Sentry Group, Inc. listed on the signature pages thereto

         4.3(1)             Escrow Agreement dated as of October 20, 1998 among META
                              Group, Inc., Peter A. Naber and State Street Bank and
                              Trust Company

         4.4(6)             Form of Common Stock Purchase Warrant (Immediate Vesting)
                              issued to stockholders of The Sentry Group, Inc. on
                              October 20, 1998

         4.5(6)             Form of Common Stock Purchase Warrant (Contingent Vesting)
                              issued to stockholders of The Sentry Group, Inc. on
                              October 20, 1998
</TABLE>

                                       31
<PAGE>

<TABLE>
<CAPTION>
           EXHIBIT
           NUMBER           DESCRIPTION
    ---------------------   -----------
    <C>                     <S>
        10.1(7)*            Amended and Restated 1995 Stock Plan

        10.2(4)*            Form of Incentive Stock Option Agreement under the Amended
                              and Restated 1995 Stock Plan

        10.3(4)*            Form of Non-Qualified Stock Option Agreement under the
                              Amended and Restated 1995 Stock Plan

        10.4(5)*            1995 Employee Stock Purchase Plan Enrollment Authorization
                              Form

        10.5(3)*            1995 Non-Employee Director Stock Option Plan

        10.6(4)*            Form of Non-Qualified Stock Option Agreement under the 1995
                              Non-Employee Director Stock Option Plan of the Registrant

        10.7(3)(2)*         Agreement between First Albany Corporation and the Company
                              dated March 30, 1995

        10.8(3)*            Restated and Amended 1989 Stock Option Plan, as amended

        10.9(3)*            Form of Incentive Stock Option Agreement under 1989 Stock
                              Option Incentive Plan

        10.10(3)*           Form of Certificate and Agreement under Restated and Amended
                              1989 Stock Option Plan

        10.11(3)*           1993 Stock Option and Incentive Plan, as amended

        10.12(3)*           Form of Certificate and Agreement under 1993 Stock Option
                              and Incentive Plan

        10.13(3)*           Form of Warrant under the Restated and Amended 1989 Stock
                              Option Plan and 1993 Stock Option and Incentive Plan

        10.14(3)            Form of International Sales Representative Agreement

        10.15(3)            Office Lease between International Business Machines
                              Corporation and the Company dated August 1, 1994

        10.16(6)*           Form of META Group, Inc./JMI Long Term Incentive
                              Compensation Plan

        10.17(7)*           Amended and Restated 1996 Equity Compensation Plan of The
                              Sentry Group, Inc.

        10.18(8)*           Employment agreement between META Group, Inc. and Larry R.
                              DeBoever dated as of October 15, 1996

        10.19(8)*           Promissory Note dated as of November 1, 1996 issued by
                              Larry R. DeBoever to META Group, Inc. in an aggregate
                              principal amount of $500,000

        10.20(8)*           Amended and Restated 1995 Employee Stock Purchase Plan

        10.21(9)(2)*        Application Productivity Strategies Development and Services
                              Agreement between META Group, Inc., and Rubin Systems
                              Incorporated and Howard Rubin, dated October 11, 1996 (the
                              "Rubin Agreement")

        10.22(9)(2)*        Addendum to Rubin Agreement dated October 21, 1997

        10.23(9)(2)*        Addendum to Rubin Agreement dated June 30, 1998

        10.24(9)(2)*        Addendum 3 to Rubin Agreement dated June 14, 1999

        10.25*+             Letter agreement dated as of February 2, 2000 between META
                              Group, Inc. and Larry R. DeBoever (with certain
                              information omitted)

        11.1+               Statement regarding computation of per share earnings

        21.1+               List of subsidiaries
</TABLE>

                                       32
<PAGE>

<TABLE>
<CAPTION>
           EXHIBIT
           NUMBER           DESCRIPTION
    ---------------------   -----------
    <C>                     <S>
        23.1+               Consent of Deloitte & Touche LLP

        24.1+               Power of Attorney (see page 34)

        27.1+               Financial Data Schedule
</TABLE>

------------------------

(1) Incorporated herein by reference to the exhibits to the Company's Current
    Report on Form 8-K dated October 20, 1998 and filed on November 3, 1998
    (File No. 0-27280).

(2) Confidential treatment obtained as to certain portions.

(3) Incorporated herein by reference to the exhibits to the Company's
    Registration Statement on Form S-1 (File No. 33-97848).

(4) Incorporated herein by reference to the exhibits to the Company's
    Registration Statement on Form S-8 (File No. 333-1854).

(5) Incorporated herein by reference to the exhibits to the Company's
    Registration Statement on form S-8 (File No. 33-80539).

(6) Incorporated herein by reference to the exhibits to the Company's Quarterly
    Report on Form 10-Q dated November 16, 1998 (File No. 0-27280).

(7) Incorporated herein by reference to the exhibits to the Company's
    Registration Statement on Form S-8 (File No. 333-68323).

(8) Incorporated herein by reference to the exhibits to the Company's Quarterly
    Report on Form 10-Q dated May 14, 1999 (File No. 0-27280)

(9) Incorporated herein by reference to the exhibits to the Company's Quarterly
    Report on Form 10-Q dated August 16, 1999 (File No. 0-27280)

*   Indicates a management contract or any compensatory plan, contract or
    arrangement.

+   Filed herewith.

    (b) REPORTS ON FORM 8-K

    There were no reports on Form 8-K filed by the Company for the quarter ended
December 31, 1999.

    (c) EXHIBITS.

    The Company hereby files as part of this Annual Report on Form 10-K the
exhibits listed in Item 14(a)(3) set forth above.

                                       33
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

<TABLE>
<S>                                                    <C>  <C>
                                                       META GROUP, INC.

Date: March 30, 2000                                   By:               /s/ DALE KUTNICK
                                                            -----------------------------------------
                                                                           Dale Kutnick
                                                              PRESIDENT, CHIEF EXECUTIVE OFFICER AND
                                                                       CO-RESEARCH DIRECTOR
</TABLE>

                        POWER OF ATTORNEY AND SIGNATURES

    We, the undersigned officers and directors of META Group, Inc., hereby
severally constitute and appoint Dale Kutnick and Bernard F. Denoyer, and each
of them singly, our true and lawful attorneys, with the power to them and each
of them singly, to sign for us and in our names in the capacities indicated
below, any amendments to this Report on Form 10-K, and generally to do all
things in our names and on our behalf in such capacities to enable META
Group, Inc. to comply with the provisions of the Securities Exchange Act of
1934, as amended, and all the requirements of the Securities and Exchange
Commission.

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant, in the capacities indicated, on the 30(th) day of March 2000.

<TABLE>
<CAPTION>
                      SIGNATURE                                           TITLE(S)
                      ---------                                           --------
<C>                                                    <S>
                  /s/ DALE KUTNICK
     -------------------------------------------       President, Chief Executive Officer (Principal
                    Dale Kutnick                         Executive Officer) and Co-Research Director

                                                       Senior Vice President--Finance, Chief
               /s/ BERNARD F. DENOYER                    Financial Officer, Treasurer and Secretary
     -------------------------------------------         (Principal Financial Officer and Principal
                 Bernard F. Denoyer                      Accounting Officer)

               /s/ FRANCIS J. SALDUTTI
     -------------------------------------------       Director
                 Francis J. Saldutti

                 /s/ HARRY S. GRUNER
     -------------------------------------------       Director
                   Harry S. Gruner

     -------------------------------------------       Director
                   Michael Simmons

                /s/ GEORGE C. MCNAMEE
     -------------------------------------------       Director
                  George C. McNamee

     -------------------------------------------       Director
                    Howard Rubin
</TABLE>

                                       34
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
META Group, Inc.
Stamford, Connecticut

    We have audited the accompanying consolidated balance sheets of META
Group, Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedule listed at Item 14(a) 2.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.

    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of META Group, Inc. and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.
Also in our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

                                          DELOITTE & TOUCHE LLP

Stamford, Connecticut
February 4, 2000

                                      F-1
<PAGE>
                                META GROUP, INC.

                          CONSOLIDATED BALANCE SHEETS

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 10,106   $  9,945
  Marketable securities.....................................               21,031
  Accounts receivable, less allowance for doubtful accounts
    of $673 and $1,088......................................    55,279     35,306
  Deferred commissions......................................     2,402      1,436
  Deferred tax asset........................................       407      3,808
  Other current assets......................................     1,795      1,960
                                                              --------   --------
    Total current assets....................................    69,989     73,486
Marketable securities.......................................     6,253     15,850
Furniture and equipment, net................................     7,170      4,553
Deferred tax asset..........................................     1,908        792
Goodwill, net...............................................     5,527      5,528
Investments and advances....................................    16,210      8,669
Other assets................................................     6,393      3,309
                                                              --------   --------
    Total assets............................................  $113,450   $112,187
                                                              ========   ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $    387   $  1,432
  Deferred revenues.........................................    42,111     31,276
  Accrued compensation......................................     4,934      5,314
  Accrued liabilities.......................................     2,367        782
  Other current liabilities.................................     1,966        693
                                                              --------   --------
    Total current liabilities liabilities...................    51,765     39,497
                                                              --------   --------
Commitments and contingencies (See Note 8)
Stockholders' equity:
  Preferred stock, $.01 par value, authorized 2,000,000
    shares; none issued.....................................
  Common stock, $.01 par value, authorized 45,000,000
    shares; issued 10,856,124 and 12,319,377 shares.........       109        123
  Paid-in capital...........................................    38,691     58,443
  Retained earnings.........................................    23,674     14,444
  Accumulated other comprehensive loss......................      (469)
  Treasury stock, at cost, 647,016 shares...................      (320)      (320)
                                                              --------   --------
    Total stockholders' equity..............................    61,685     72,690
                                                              --------   --------
    Total liabilities and stockholders' equity..............  $113,450   $112,187
                                                              ========   ========
</TABLE>

                See notes to consolidated financial statements.

                                      F-2
<PAGE>
                                META GROUP, INC.

                       CONSOLIDATED STATEMENTS OF INCOME

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues:
  Research and advisory services............................  $71,524    $58,586    $44,152
  Strategic consulting......................................   20,844      9,404      5,214
  Published research products...............................    7,315      4,795      1,829
                                                              -------    -------    -------
    Total revenues..........................................   99,683     72,785     51,195
                                                              -------    -------    -------
Operating expenses:
  Cost of services and fulfillment..........................   52,224     35,098     24,602
  Selling and marketing.....................................   23,194     16,702     12,477
  General and administrative................................    8,356      6,753      5,006
  Depreciation and amortization.............................    2,596      1,894      1,501
                                                              -------    -------    -------
    Total operating expenses................................   86,370     60,447     43,586
                                                              -------    -------    -------
Operating income............................................   13,313     12,338      7,609
Other income, primarily interest, net.......................    1,800      2,621      2,138
                                                              -------    -------    -------
Income before provision for income taxes....................   15,113     14,959      9,747
Provision for income taxes..................................    5,883      6,174      3,980
                                                              -------    -------    -------
Net income..................................................  $ 9,230    $ 8,785    $ 5,767
                                                              =======    =======    =======
Net income per diluted common share.........................  $   .80    $   .70    $   .48
                                                              =======    =======    =======
Weighted average number of diluted common shares
  outstanding...............................................   11,501     12,596     11,937
                                                              =======    =======    =======
Net income per basic common share...........................  $   .86    $   .78    $   .53
                                                              =======    =======    =======
Weighted average number of basic common shares
  outstanding...............................................   10,719     11,326     10,821
                                                              =======    =======    =======
</TABLE>

                See notes to consolidated financial statements.

                                      F-3
<PAGE>
                                META GROUP, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                            ACCUMULATED
                                               OTHER          COMMON STOCK                  RETAINED      TREASURY STOCK
                                           COMPREHENSIVE   -------------------   PAID-IN    EARNINGS    -------------------
                                 TOTAL         LOSS         SHARES     AMOUNT    CAPITAL    (DEFICIT)    SHARES     AMOUNT
                                --------   -------------   --------   --------   --------   ---------   --------   --------
<S>                             <C>        <C>             <C>        <C>        <C>        <C>         <C>        <C>
Balance, January 1, 1997......  $42,728                     10,146    $   102    $43,054     $  (108)     (647)     $(320)
Exercise of stock options.....      364                      1,608         16        348
Issuance of shares under
  employee stock purchase
  plan........................      254                         21                   254
Income tax benefit from stock
  options exercised...........    6,287                                            6,287
Net income....................    5,767                                                        5,767
                                -------       -------       ------    -------    -------     -------     -----      -----
Balance, December 31, 1997....   55,400                     11,775        118     49,943       5,659      (647)      (320)
Exercise of stock options.....    1,636                        328          3      1,633
Issuance of shares under
  employee stock purchase
  plan........................      344                         21                   344
Income tax benefit from stock
  options exercised...........      984                                              984
Sentry acquisition (Note 3)...    4,706                        195          2      4,704
Sentry warrants (Note 3)......      835                                              835
Net income....................    8,785                                                        8,785
                                -------       -------       ------    -------    -------     -------     -----      -----
Balance, December 31, 1998....   72,690                     12,319        123     58,443      14,444      (647)      (320)
Exercise of stock options.....    1,538                        487          5      1,533
Issuance of shares under
  employee stock purchase
  plan........................      734                         57          1        733
Equity based compensation.....      150                                              150
Income tax benefit from stock
  options exercised...........      563                                              563
Repurchase and retirement of
  shares......................  (22,751)                    (2,007)       (20)   (22,731)
Comprehensive income:
  Unrealized loss on
    marketable securities.....     (469)      $  (469)
  Net income..................    9,230                                                        9,230
                                -------       -------       ------    -------    -------     -------     -----      -----
Total comprehensive income....    8,761
                                -------
Balance, December 31, 1999....  $61,685       $  (469)      10,856    $   109    $38,691     $23,674      (647)     $(320)
                                =======       =======       ======    =======    =======     =======     =====      =====
</TABLE>

                See notes to consolidated financial statements.

                                      F-4
<PAGE>
                                META GROUP, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Operating activities:
Net income..................................................  $ 9,230    $ 8,785    $ 5,767
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation and amortization.............................    2,596      1,894      1,501
  (Benefit) provision for doubtful accounts.................     (415)       260         77
  Write-off of equipment....................................                  40
  Loss on sale of marketable securities.....................      268
  Equity based compensation.................................      150
  Deferred income taxes.....................................    2,559      5,970      3,820
  Changes in assets and liabilities (net of business
    acquisition):
    Accounts receivable.....................................  (20,660)    (8,253)    (8,243)
    Deferred commissions....................................     (966)       (85)       124
    Other current assets....................................      412       (783)      (645)
    Other assets............................................   (2,023)    (1,077)      (740)
    Accounts payable........................................   (1,074)      (271)       137
    Accrued compensation and other expenses.................    3,041        704        144
    Deferred revenues.......................................   10,835      2,110      6,251
                                                              -------    -------    -------
Net cash provided by operating activities...................    3,953      9,294      8,193
                                                              -------    -------    -------
Investing activities:
  Capital expenditures......................................   (4,978)    (3,177)    (1,908)
  Proceeds from sales/maturities of (investments in)
    marketable securities...................................   29,357     (9,135)   (12,062)
  Investments and advances..................................   (7,692)    (1,927)    (1,266)
                                                              -------    -------    -------
Net cash provided by (used in) investing activities.........   16,687    (14,239)   (15,236)
                                                              -------    -------    -------
Financing activities:
  Repurchase of shares......................................  (22,751)
  Proceeds from employee stock purchase plan................      734        344        254
  Proceeds from exercise of stock options...................    1,538      1,636        364
                                                              -------    -------    -------
Net cash (used in) provided by financing activities.........  (20,479)     1,980        618
                                                              -------    -------    -------
Net increase (decrease) in cash and cash equivalents........      161     (2,965)    (6,425)
Cash and cash equivalents at beginning of year..............    9,945     12,910     19,335
                                                              -------    -------    -------
Cash and cash equivalents at end of year....................  $10,106    $ 9,945    $12,910
                                                              =======    =======    =======
Supplemental information:
  Cash paid during the year for income taxes................  $   846    $   221    $   216
                                                              =======    =======    =======
</TABLE>

    During the year ended December 31, 1998, the Company acquired The Sentry
Group, Inc. for 195,066 shares of common stock valued at $4.7 million and
warrants valued at $835,000.

                See notes to consolidated financial statements.

                                      F-5
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS DESCRIPTION

    META Group, Inc. and its wholly-owned subsidiaries, The Sentry Group, Inc.
(see Note 3) and MG (Bermuda) Ltd. (collectively the "Company"), is an
independent market and business process assessment company. The Company provides
research and analysis of developments, trends and organizational issues relating
to the computer hardware, software, communications and related information
technology ("IT") industries and their impact on the conduct of business to IT
users and vendors. IT user organizations utilize the Company's research,
analysis and recommendations to develop and employ cost-effective and revenue
enhancing strategies for selecting and implementing timely IT solutions and for
aligning these solutions with business priorities. IT vendors use the Company's
services for help in product positioning, marketing and market planning, as well
as for internal IT decision-making.

    The Company's domestic revenues are generated by a direct sales force
calling on IT user and vendor clients. International marketing and sales are
performed by independent sales representative organizations. Under the terms of
the Company's international sales representative agreements, the Company
realizes revenues from the international sales representative organizations at
rates of 40% to 60% of amounts billed to those clients.

    Revenues from international sales representative organizations, primarily in
Europe, accounted for approximately 16%, 15% and 14% of the Company's total
Research and Advisory Services revenues for the years ended December 31, 1999,
1998 and 1997, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES

    PRINCIPLES OF CONSOLIDATION  The consolidated financial statements include
the accounts of META Group, Inc., MG (Bermuda) Ltd., and The Sentry Group, Inc.
since the date of acquisition. All significant intercompany balances and
transactions have been eliminated in consolidation.

    REVENUE AND COMMISSION EXPENSE RECOGNITION  Research and Advisory Services
revenues are recognized on a straight-line basis over the subscription contract
period, generally one year. All subscription contracts are billable at signing,
absent special terms granted on a limited basis from time to time. As such, the
Company's policy is to record at the time of signing of a Research and Advisory
Services subscription contract the fees receivable and related deferred revenues
for the full amount of the subscription contract. The Company also records the
related commission obligation upon the signing of the subscription contract and
amortizes the corresponding deferred commission expense over the subscription
period in which the related Research and Advisory Services revenues are earned
and amortized to income. All subscription contracts are cancelable only for
non-performance, except for certain government contracts which have a 30-day
cancellation clause. Historically, such cancellations have not been material.
Strategic Consulting revenues and Published Research Products revenues are
recognized at the time the related service is rendered or product delivered.

    REVENUE PRESENTATION  In 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("SFAS 131"). Effective January 1, 1999, the Company
changed the way it reports revenues on its Consolidated Statements of Income to
be consistent with the direction of SFAS 131. Consequently, the Company now
reports separately the revenues earned from each of its three operating
segments, which is consistent with the way the Company manages its operations.

    RECLASSIFICATIONS  Certain prior year balances have been reclassified to
conform with the current year presentation.

                                      F-6
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    PRODUCT DEVELOPMENT  All costs incurred in the development of new products
and services are expensed as incurred.

    FURNITURE AND EQUIPMENT  Furniture and equipment is stated at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the respective assets which range from two to seven years.

    INCOME TAXES  Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the income tax basis of
the Company's assets and liabilities as measured by the presently enacted tax
rates.

    CASH EQUIVALENTS AND MARKETABLE SECURITIES  Cash and cash equivalents
include cash on hand and all investments in highly liquid instruments purchased
with original maturities of three months or less. At December 31, 1999 and 1998,
the Company had cash equivalents of $5,774 and $5,409, respectively. Investments
with original maturities of more than three months are classified as marketable
securities. Marketable securities at December 31, 1999 are considered
"available-for-sale" and carried at fair market value (see Note 4). Unrealized
losses, net of income tax benefits, are reflected as "accumulated other
comprehensive loss" in Stockholders' Equity and have no effect on net income.

    EARNINGS PER SHARE  Basic earnings per share is computed by dividing net
income by the weighted average number of common shares outstanding. Diluted
earnings per share is computed by dividing net income by the weighted average
number of common shares outstanding and dilutive common equivalent shares
(common stock options) outstanding. Common shares outstanding includes issued
shares less shares held in treasury for the respective year.

    CONCENTRATION OF CREDIT RISK  The Company has no material off-balance-sheet
concentration of credit risk such as foreign exchange contracts, options
contracts or other foreign hedging arrangements. The Company invests the
majority of its cash balances in short-term, high quality marketable debt
securities, managed by three financial institutions. The Company's accounts
receivable balances are primarily domestic. No single client accounted for
greater than 4% of revenues or represents a significant credit risk to the
Company.

    FAIR VALUE OF FINANCIAL INSTRUMENTS  The carrying amount of all of the
Company's cash and cash equivalents, and marketable securities, approximates
fair value due to the short-term maturity of those investments.

    LONG LIVED ASSETS  The Company follows Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." The Company reviews the
recoverability of its long-lived assets when events or changes in circumstances
occur that indicate that the carrying value of the asset may not be recoverable.
Evaluation of possible impairment is based on the Company's ability to recover
the asset from the expected future cash flows (undiscounted and without interest
charges) of the related operations. If the expected undiscounted cash flows are
less than the carrying value of such asset, an impairment loss would be
recognized for the difference between estimated fair value and carrying value.
This assessment of impairment requires management to make estimates of expected
future cash flows. It is at least reasonably possible that future events or
circumstances could cause these estimates to change.

    MANAGEMENT ESTIMATES  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the

                                      F-7
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could
differ from those estimates.

    GOODWILL  Goodwill consists of the excess of the purchase price over the
fair value of net assets acquired and is being amortized using the straight-line
method over thirty years.

    ADOPTION OF FINANCIAL ACCOUNTING STANDARDS  In June 1998, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 is effective for fiscal years beginning after
June 15, 2000 and defines a derivative and establishes common accounting
principles for all types of derivative financial instruments. The Company is
currently evaluating the impact, if any, of SFAS No. 133.

3. ACQUISITIONS

    In October 1998, the Company completed the acquisition of all of the
outstanding capital stock of The Sentry Group, Inc. ("Sentry"), an IT consulting
company, for an initial payment of 195,066 shares of common stock and a
contingent payment of up to $7 million in common stock or (at the Company's
option) cash in the event certain financial targets were met by Sentry for 1999.
As of December 31, 1999, a contingent payment of $7 million had been earned and
the Company intends to pay such earned amount principally in stock and, to a
lesser extent, in cash on or about April 30, 2000. The Company currently
anticipates that it will file a registration statement with the Securities and
Exchange Commission to provide for the resale of the contingent shares on or
about April 30, 2000 and the amount of contingent consideration it intends to
pay in cash and all associated costs will be approximately $500,000. In
addition, the Company issued to Sentry stockholders warrants to purchase up to
200,000 shares of the Company's common stock at $30.00 per share, 125,000
warrants of which were immediately exercisable and 75,000 warrants which were
contingently exercisable upon Sentry achieving certain financial targets in
1999. Because such financial targets were achieved, the contingent warrants
become fully exercisable. The 125,000 warrants expire in October 2002. The
75,000 warrants expire four years after the date the Company pays the contingent
consideration. The fair value of the contingent warrants, as well as the
$7 million contingent payment, will increase goodwill when paid.

    The fair value of the noncontingent consideration, including acquisition
costs, was $5.9 million. The acquisition was accounted for under the purchase
method and, accordingly, the operations of Sentry have been included in the
consolidated financial statements from the date of acquisition. The purchase
price was allocated to the net assets acquired based upon their estimated fair
values. Such allocation resulted in goodwill of $5.6 million which is being
amortized over thirty years. Accumulated amortization of goodwill at
December 31, 1999 and 1998 was $231,000 and $37,000, respectively.

                                      F-8
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACQUISITIONS (CONTINUED)
    The unaudited pro forma results of operations for the years ended
December 31, 1998 and 1997 have been set forth below as though the acquisition
had occurred as of January 1, 1997.

<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                                DECEMBER 31,
                                                            ---------------------
                                                              1998        1997
                                                            ---------   ---------
                                                            (IN THOUSAND'S EXCEPT
                                                             PER SHARE AMOUNTS)
                                                                 (UNAUDITED)
<S>                                                         <C>         <C>
Revenues..................................................   $79,200     $59,365
Income before income taxes................................    14,745       9,973
Net income................................................     8,659       5,901
Net income per common share
  Diluted.................................................   $   .68     $   .49
  Basic...................................................   $   .75     $   .54
</TABLE>

    In 1997, the Company completed the acquisition of certain assets of The
Verity Group ("Verity"), an IT consulting company, for an initial payment of
$1,000 in cash and contingent consideration of up to $1,080,000 in cash in the
event certain financial targets are met by Verity in each of the four years
ending December 31, 2001. In March 1999, the Company paid Verity $152,000 for
meeting the 1998 financial targets. The payment increased goodwill in 1999.
Consideration, if any, for Verity's 1999 results will be paid by March 31, 2000.

4. MARKETABLE SECURITIES

    At December 31, 1998, the Company held investments in marketable securities
which were classified as held-to-maturity; accordingly, they were carried at
amortized cost plus accrued interest on the consolidated balance sheet.
Effective in the quarter ended June 30, 1999, the Company reclassified its
entire portfolio of marketable securities from held-to-maturity to available for
sale. At December 31, 1999, such securities have been marked-to-market,
resulting in an unrealized loss of $469,000, net of $274,000 of income tax
benefits. The unrealized loss is reflected as "Accumulated other comprehensive
loss" in Stockholders' equity and has no effect on net income for the year ended
December 31, 1999. During the year ended December 31, 1999, the Company
liquidated $29.3 million of its marketable securities on hand at December 31,
1998. Of the $29.3 million, $17.7 million was used to finance the Company's
stock repurchase plan (Note 7), $5 million was re-invested into short-term
commercial paper (classified as a cash equivalent on the December 31, 1999
consolidated balance sheet), and $6.6 million was used for working capital
purposes. Of the $29.3 million, $14 million came from proceeds of securities
that were either called by the issuer or matured, and $15.3 million came from
securities that were sold. During 1999, the Company recognized $268,400 in
losses on the sale of marketable securities. These losses are reflected in
"Other income" on the Company's consolidated statements of income. Marketable
securities at December 31, 1999 and 1998 include the following (in thousands):

<TABLE>
<CAPTION>
                                                          DECEMBER 31, 1999
                                                 ------------------------------------
                                                                GROSS
                                                              UNREALIZED
                                                               HOLDING         FAIR
                                                   COST     GAINS (LOSSES)    VALUE
                                                 --------   --------------   --------
<S>                                              <C>        <C>              <C>
U.S. government issued mortgage backed bonds...   $6,996        $(743)        $6,253
                                                  ======        =====         ======
</TABLE>

                                      F-9
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. MARKETABLE SECURITIES (CONTINUED)

<TABLE>
<CAPTION>
                                                         DECEMBER 31, 1998
                                                     -------------------------
<S>                                                  <C>       <C>     <C>
Discounted commercial paper........................  $20,370   $ 477   $20,847
U.S. government issued mortgage backed bonds.......   12,000     (97)   11,903
Asset backed securities............................    1,850             1,850
Municipal bonds....................................    2,000             2,000
Accrued interest...................................      661               661
                                                     -------   -----   -------
                                                     $36,881   $ 380   $37,261
                                                     =======   =====   =======
</TABLE>

    The contractual maturities of marketable securities at December 31, 1999 are
as follows (in thousands):

<TABLE>
<CAPTION>
                                                               DECEMBER 31, 1999
                                                              -------------------
                                                                           FAIR
                                                                COST      VALUE
                                                              --------   --------
<S>                                                           <C>        <C>
Due after one year through fifteen years....................   $6,996     $6,253
                                                               ======     ======
</TABLE>

    Actual maturities may differ from contractual maturities because the
borrower has the right to call the obligations.

5. FURNITURE AND EQUIPMENT

    Furniture and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Leasehold improvements......................................   $  528     $  399
Computer equipment, software, and peripherals...............   10,397      7,186
Furniture and fixtures......................................    1,173        942
                                                               ------     ------
                                                               12,098      8,527
Less: accumulated depreciation and amortization.............   (4,928)    (3,974)
                                                               ------     ------
                                                               $7,170     $4,553
                                                               ======     ======
</TABLE>

    Depreciation of furniture and equipment was $2.3 million, $1.8 million,
$1.5 million for the years ended December 31, 1999, 1998 and 1997, respectively.

6. INVESTMENTS AND ADVANCES

    During the years ended December 31, 1999 and 1998, the Company continued to
make investments in and advances to companies in parallel or synergistic
industries. The Company's strategy

                                      F-10
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INVESTMENTS AND ADVANCES (CONTINUED)
is to financially support companies, preferably start-up organizations, that are
closely aligned with its long-term vision of the market. Such investments and
advances are summarized below (in thousands):

<TABLE>
<CAPTION>
                                                        DECEMBER 31, 1999        DECEMBER 31, 1998
                                                      ----------------------   ----------------------
                                                      INVESTMENTS   ADVANCES   INVESTMENTS   ADVANCES
                                                      -----------   --------   -----------   --------
<S>                                                   <C>           <C>        <C>           <C>
Computerwire, plc...................................     $1,717      $  726       $1,717      $  520
Spikes Cavell & Co..................................      2,690                    2,690
SPEX Research LLC...................................        105         200           92         200
Market Perspectives, Inc............................        755                      294
FirstMatter (SRI)...................................        195       1,082          195       1,082
Client Server Labs/Tescom...........................      1,374                    1,029
IMG.................................................                    323                      321
IMT.................................................                    530                      529
META Security Group, Inc............................                  3,003
Syndicated Research Group...........................                    960
Ninth House, Inc....................................      1,050
Enamics, Inc........................................        487       1,013
                                                         ------      ------       ------      ------
                                                         $8,373      $7,837       $6,017      $2,652
                                                         ======      ======       ======      ======
</TABLE>

    In December 1999, the Company invested $487,000 in Enamics, Inc. ("Enamics")
in exchange for shares of Enamics Series A Cumulative Convertible Preferred
Stock. In addition, the Company advanced $1 million in exchange for a secured
subordinated note, convertible into Enamics' Series A Cumulative Convertible
Preferred Stock. Enamics was established to assist companies define, simulate,
plan and architect e-Business initiatives.

    In November 1999, the Company invested $1 million in Ninth House, Inc.
("Ninth House"), in exchange for shares of Ninth House's Series B Convertible
Preferred Stock. Ninth House is a provider of interactive, online learning
content to businesses and individuals, utilizing both the Internet and corporate
intranets as delivery platforms.

    In May 1999, the Company advanced $960,000 to Syndicated Research Group
("SRG") in exchange for a subordinated convertible promissory note, convertible
into SRG's Series A Convertible Preferred Stock. SRG is a research and advisory
firm dedicated to helping human resource professionals make business decisions
concerning human capital management issues.

    In March 1999, the Company entered into an agreement to advance
$2.8 million to META Security Group, Inc. ("MSG"), an independent Internet
security consulting firm, in exchange for a secured convertible promissory note,
convertible into MSG's common stock. As of December 31, 1999, the Company had
advanced the full $2.8 million. In July 1999, the Company entered into an
agreement to advance an additional $1 million to MSG in exchange for a secured
promissory note. As of December 31, 1999, $216,000 had been advanced under such
agreement.

    In October 1998, the Company advanced $500,000 to IMT Strategies, Inc.
("IMT") in exchange for a secured convertible promissory note, convertible into
IMT's common stock. IMT was established to deliver syndicated research,
publications, consulting services, management education and training focused on
the integration of marketing and technology.

                                      F-11
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INVESTMENTS AND ADVANCES (CONTINUED)
    In October 1998, the Company advanced $300,000 to Intermedia Group, Inc.
("IMG") in the form of a loan represented by a senior secured promissory note,
convertible into IMG's common stock. IMG is an integrated media and conference
business established to serve markets in a complementary fashion to the
Company's main lines or new lines of business.

    In September 1998, the Company made an investment of $1 million in
Client/Server Labs, Inc. ("CSL"), a supplier of performance and functional IT
testing services, in exchange for shares of CSL common stock. In the first
quarter of 1999, the Company advanced an additional $300,000 to CSL in exchange
for a convertible promissory note, convertible into CSL common stock. In
December 1999, the Company exercised its conversion option and received shares
of CSL common stock. In December 1999, all of the outstanding shares of common
stock of CSL were acquired by Tescom Software Systems Testing Ltd. ("Tescom"), a
full service independent IT testing company, in exchange for shares of Tescom
common stock. Pursuant to such acquisition, the Company's shares in CSL were
exchanged for restricted shares of Tescom.

    In August 1998, Spikes Cavell & Company Limited ("SC"), a UK based
corporation, sold its market research database business to Ziff-Davis, Inc. for
up-front cash consideration and contingent performance-based consideration to be
paid through 2002. In September 1999, SC was placed in voluntary liquidation and
the collection of the contingent consideration is being addressed by a licensed
insolvency practitioner and joint liquidator appointed by the creditors
committee. The market research database business supporting the contingent
payment continues to operate as a business unit of Ziff-Davis, Inc. and the
Company has no reason to believe its investment in SC has been impaired.

    All of the investments listed above are for less than a 20% stock ownership
interest in the investee. As the Company does not exert significant influence in
of any of the investees, all investments are accounted for on the cost basis.

7. COMMON STOCK REPURCHASES

    On April 14, 1999, the Company's Board of Directors unanimously authorized
the repurchase of up to 1.2 million shares of its common stock in the open
market and in privately negotiated transactions from time to time, depending on
market conditions and other factors. On May 3, 1999, the Company announced the
expansion of the repurchase program to a total of 2.4 million shares. During the
period April 19, 1999 to June 15, 1999, 1,989,993 shares were repurchased at an
average price of $11.28 per share for a total cost of $22.5 million. All shares
repurchased have been retired to the status of authorized but unissued.

    Additionally, in April 1999, the Company repurchased for approximately
$266,470 in cash 2,389 shares of its common stock and warrants to purchase 2,449
shares of its common stock from a minority stockholder pursuant to the terms of
a Settlement Agreement, dated October 31, 1995, between the stockholder and
Sentry. Such repurchase obligation was assumed by the Company upon the
acquisition of Sentry in October 1998. The fair market value of the repurchased
securities and all associated costs were recovered from a purchase consideration
escrow established for the satisfaction of indemnification claims pursuant to
the terms of the Agreement and Plan of Merger between Sentry and the Company.
Such recovery by the Company was in the form of a release of 15,264 shares of
the Company's common stock from the Sentry purchase consideration escrow. Such
released shares were retired to the status of authorized but unissued.

                                      F-12
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. COMMITMENTS AND CONTINGENCIES

    LEASE COMMITMENTS:

    The Company leases office facilities and equipment under noncancelable
operating leases. Future minimum lease payments relative to these agreements are
as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S>                                                           <C>
2000........................................................  $ 3,399
2001........................................................    3,192
2002........................................................    1,500
2003........................................................    1,210
2004........................................................    1,204
Thereafter..................................................    2,181
                                                              -------
                                                              $12,686
                                                              =======
</TABLE>

    Total rent expense was $2.5 million, $2.0 million and $1.6 million for years
ended December 31, 1999, 1998, and 1997, respectively.

    CONTINGENCIES:

    The Company is a party to certain legal proceedings arising in the ordinary
course of business. The Company believes that none of these proceedings is
likely to have a material adverse effect on the Company's business, results of
operations or financial position. Accordingly, no provision for any liability
has been made in the accompanying consolidated financial statements.

    GUARANTEES:

    The Company currently guarantees certain local bank borrowings of its
independent sales representative organizations by extending irrevocable letters
of credit to local banks, renewable annually. Should the independent sales
representatives default on the terms of their repayment obligations to their
bank, the Company's guarantee could be called upon. At December 31, 1999, the
total of these guarantees is approximately $1.5 million and no individual
guarantee exceeds $350,000. In addition, the Company has a $600,000 letter of
credit with a bank for its Stamford, CT office lease. Should the Company default
on any lease payments, the letter of credit may be called.

9. INCOME TAXES

    The provision for income taxes is as follows (in thousands):

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                      ------------------------------
                                                        1999       1998       1997
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Current--federal....................................   $1,890     $  204
      --state and other.............................    1,434                $  160
                                                       ------     ------     ------
                                                        3,324        204        160
                                                       ------     ------     ------
Deferred--federal...................................    1,477      4,908      2,866
       --state......................................    1,082      1,062        954
                                                       ------     ------     ------
                                                        2,559      5,970      3,820
                                                       ------     ------     ------
                                                       $5,883     $6,174     $3,980
                                                       ======     ======     ======
</TABLE>

                                      F-13
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES (CONTINUED)

    A reconciliation of the income tax provision from the amount computed using
the federal statutory rate is as follows (in thousands):

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                      ------------------------------
                                                        1999       1998       1997
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Income tax at statutory rate........................   $5,289     $5,086     $3,314
State and other taxes, net of federal benefit.......    2,454      1,007        659
Impact of valuation allowance.......................   (1,939)
Other...............................................       79         81          7
                                                       ------     ------     ------
                                                       $5,883     $6,174     $3,980
                                                       ======     ======     ======
</TABLE>

    The principal components of the Company's deferred tax assets and
(liabilities) are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                             -------------------
                                                               1999       1998
                                                             --------   --------
<S>                                                          <C>        <C>
Depreciation and amortization..............................   $  244    $    96
Unrealized losses on securities............................      383
Allowance for doubtful accounts............................      407        420
Capitalization of product development costs................                  30
Net operating loss carryforwards...........................    1,666      6,061
Other......................................................     (182)       135
                                                              ------    -------
Deferred tax asset.........................................    2,518      6,742
  Valuation allowance......................................     (203)    (2,142)
                                                              ------    -------
Net deferred tax asset.....................................   $2,315    $ 4,600
                                                              ======    =======
</TABLE>

    During the year ended December 31, 1999, the Company decreased the valuation
allowance by $1.9 million. Of this amount, $1.1 million was decreased due to the
utilization of net operating loss carryforwards during 1999. The remaining
$800,000 decrease resulted from a change in federal tax law that will permit the
utilization of Sentry's pre-acquisition net operating losses by the Company.
While such losses will be subject to an annual limitation, the Company believes
that it is more likely than not that such losses will be utilized in full during
the carryforward period.

    During the year ended December 31, 1998, the Company increased the valuation
allowance by $1 million to properly reflect the additional valuation allowance
related to the deferred tax assets acquired as part of the Sentry acquisition.

    At December 31, 1999, the Company has net operating loss carryforwards for
federal income tax purposes of $3.9 million expiring in 2000 through 2012.

    The exercise of non-qualified stock options and the disqualifying
dispositions of incentive stock options under the Company's stock option plans
gives rise to compensation which is includable in the taxable income of the
recipients and deductible by the Company for federal and state income tax
purposes. The tax benefit recognized from the utilization of such deductions
increased paid-in capital by $563,000, $1.0 million, and $6.3 million during the
years ended December 31, 1999, 1998, and 1997, respectively. As of December 31,
1999, 365,057 shares were issuable upon the exercise of outstanding
non-qualified stock options held by employees.

                                      F-14
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK OPTION PLANS

    The Company's 1995 Non-Employee Director Stock Option Plan, Amended and
Restated 1995 Stock Plan, 1993 Stock Option and Incentive Plan, Amended and
Restated 1989 Stock Option Plan and Amended and Restated 1996 Equity
Compensation Plan of The Sentry Group, Inc., (the "Plans") provide for grants to
employees, directors and consultants of incentive stock options ("ISOs") and
non-qualified stock options ("NQSOs"), for the purchase of up to 225,000,
4,500,000, 2,400,000, 5,400,000 and 359,500 shares of the Company's common
stock, respectively. All options were granted at an exercise price of not less
than fair market value. The Compensation Committee determined the date(s) at
which options vest and become exercisable. Upon adoption of the 1995 Stock Plan,
the 1993 Stock Option and Incentive Plan and the 1989 Stock Option Plan were
terminated, except as to outstanding stock options.

    Stock option activity under the Plans from January 1, 1997 to December 31,
1999 was as follows:

<TABLE>
<CAPTION>
                                                                                      WEIGHTED-AVERAGE
                                                                                           PRICE
                                                     OPTIONS     OPTION PRICE RANGE       EXERCISE
                                                    ----------   ------------------   ----------------
<S>                                                 <C>          <C>                  <C>
Outstanding January 1, 1997.......................   3,132,031    $  .10 - $22.17         $ 3.5771
  Granted.........................................     792,635     11.83 -  16.50          12.7417
  Exercised.......................................  (1,608,021)      .10 -  15.83            .3616
  Canceled........................................    (148,928)      .63 -  17.67          12.0209
                                                    ----------    ---------------         --------
Outstanding December 31, 1997.....................   2,167,717       .10 -  22.17           8.7850
  Granted.........................................   1,332,999     15.58 -  27.44          19.1136
  Exercised.......................................    (327,817)      .10 -  17.67           4.9931
  Canceled........................................    (232,626)     3.17 -  24.13          17.0729
                                                    ----------    ---------------         --------
Outstanding December 31, 1998.....................   2,940,273       .10 -  27.44          13.2346
  Granted.........................................   1,304,350      8.25 -  25.25          11.3674
  Exercised.......................................    (487,262)      .10 -  21.79           3.1561
  Canceled........................................    (340,979)     8.25 -  25.25          15.8019
                                                    ----------    ---------------         --------
Outstanding December 31, 1999.....................   3,416,382    $  .25 - $27.44         $13.7086
                                                    ==========    ===============         ========
Exercisable:
  December 31, 1999...............................   1,145,481                            $12.8367
                                                    ==========
  December 31, 1998...............................   1,123,502                            $ 6.9421
                                                    ==========
  December 31, 1997...............................   1,015,941                            $ 4.2446
                                                    ==========
</TABLE>

    At December 31, 1999, 365,057 shares were issuable upon the exercise of
outstanding NQSOs. All other stock options outstanding were ISOs.

    In October 1995, the Company adopted the 1995 Stock Plan, 1995 Non-Employee
Director Stock Option Plan, and 1995 Employee Stock Purchase Plan. Details of
the Plans are as follows:

    AMENDED AND RESTATED 1995 STOCK PLAN.  The Company's 1995 Stock Plan (the
"1995 Plan") was adopted by the Board of Directors on October 2, 1995 and
approved by the Company's stockholders on October 4, 1995. The 1995 Plan
provides for the issuance of a maximum of 4,500,000 shares of common stock
pursuant to the grant to employees of ISOs and the grant of NQSOs, stock awards
or opportunities to make direct purchases of stock in the Company to employees,
consultants, directors and officers of the Company.

                                      F-15
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK OPTION PLANS (CONTINUED)
    1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.  The 1995 Non-Employee
Director Stock Option Plan (the "Director Option Plan") was adopted by the Board
of Directors on October 2, 1995 and approved by the Company's stockholders on
October 4, 1995. The Director Option Plan provides for the grant of NQSOs to
purchase a maximum of 225,000 shares of common stock to non-employee directors
of the Company. All options granted under the Director Option Plan will have an
exercise price equal to the fair market value of common stock on the date of
grant. The term of each option will be for a period of ten years from the date
of grant.

    AMENDED AND RESTATED 1995 EMPLOYEE STOCK PURCHASE PLAN.  The Amended and
Restated 1995 Employee Stock Purchase Plan (the "1995 Purchase Plan") was
adopted by the Board of Directors and approved by the Company's stockholders on
October 2, 1995. The 1995 Purchase Plan provides for the issuance of a maximum
of 375,000 shares of common stock pursuant to the exercise of non-transferable
options granted to participating employees. The exercise price for the option is
85% of the lesser of the market price of the Company's common stock on the first
or last day of the semi-annual plan period. During the years ended December 31,
1999 and 1998, the Company issued 57,131 and 21,620 shares, respectively, under
the 1995 Purchase Plan.

    AMENDED AND RESTATED 1996 EQUITY COMPENSATION PLAN OF THE SENTRY
GROUP, INC.  The Amended and Restated 1996 Equity Compensation Plan of The
Sentry Group, Inc. (the "Sentry Plan") was adopted and assumed by the Company
pursuant to the acquisition by the Company of Sentry in October 1998. The Sentry
Plan provides for the issuance of a maximum of 359,500 shares of Common Stock
pursuant to the grant of ISOs to employees and the grant of NQSOs, stock awards
and opportunities to make direct purchases of stock to employees, consultants,
directors and officers of the Company. The terms of such options, including
number of shares, exercise price, duration and vesting are generally determined
by the Compensation Committee.

    The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
                                 OPTIONS OUTSTANDING
                        -------------------------------------      OPTIONS EXERCISABLE
                                         WEIGHTED               -------------------------
                                          AVERAGE    WEIGHTED                    WEIGHTED
      RANGE OF              NUMBER       REMAINING   AVERAGE        NUMBER       AVERAGE
      EXERCISE           OUTSTANDING       LIFE      EXERCISE    EXERCISABLE     EXERCISE
       PRICES           AS OF 12/31/99    (YEARS)     PRICE     AS OF 12/31/99    PRICE
---------------------   --------------   ---------   --------   --------------   --------
<S>                     <C>              <C>         <C>        <C>              <C>
   $  .25 - $ 8.25          919,711        6.27      $ 6.3755       253,361      $ 1.4455
     9.75 -  12.33          456,053        7.94       11.1387       140,101       11.8333
    13.02 -  15.58          658,471        7.47       14.4753       283,471       14.5648
    15.83 -  16.67          745,480        7.30       15.8441       328,813       16.1191
    16.67 -  27.44          636,667        7.84       22.8489       139,735       23.2669
   ---------------        ---------        ----      --------     ---------      --------
   $  .25 - $27.44        3,416,382        7.24      $13.7086     1,145,481      $12.8367
   ===============        =========        ====      ========     =========      ========
</TABLE>

    The weighted average remaining contractual life of options outstanding at
December 31, 1999, 1998 and 1997 was 7.24, 7.29 and 7 years, respectively. The
estimated fair value of options granted during 1999, 1998 and 1997 was $6.81,
$10.55 and $6.52 per share, respectively. The Company applies Accounting
Principles Board Opinion No. 25 and related interpretations in accounting for
its stock option and purchase plans. Had compensation cost for the Company's
stock option plans and stock purchase plan been determined based on fair value
at the option grant dates for awards in accordance

                                      F-16
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. STOCK OPTION PLANS (CONTINUED)
with the provisions of SFAS 123, the Company's net income and earnings per share
for the years ended December 31, 1999, 1998 and 1997, would have been reduced to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                        1999       1998       1997
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Net income:
  As reported.......................................   $9,230     $8,785     $5,767
  Pro forma.........................................    4,845      5,460      3,867
Net income per diluted common share:
  As reported.......................................   $  .80     $  .70     $  .48
  Pro forma.........................................      .42        .43        .32
Net income per basic common share:
  As reported.......................................   $  .86     $  .78     $  .53
  Pro forma.........................................      .45        .48        .36
</TABLE>

    The fair value of options granted under the Company's fixed stock option
plans during 1999, 1998 and 1997 was estimated on the dates of grant using the
Black-Scholes options-pricing model with the following weighted-average
assumptions used: dividend yield of zero, expected volatility of approximately
57% - 65%, risk free interest rate of approximately 5% - 6.5% and expected lives
of option grants of approximately 2.5 - 4.5 years. Pro forma compensation cost
related to shares purchased under the 1995 Employee Stock Purchase Plan is
measured based on the discount from market value. The effects of applying
SFAS 123 in this pro forma disclosure are not indicative of future pro forma
effects.

    LONG TERM INCENTIVE PLAN

    In July 1998 the Company adopted the META Group, Inc./JMI Long Term
Incentive Compensation Plan (the "Long Term Plan"). The Long Term Plan provides
for the issuance of a maximum of 1,000 units to key officers of the Company. The
total number of units to be granted, selection of key officers for participation
in the Long Term Plan, the number of units to be granted to each participant,
the vesting period and the determination of the value of each participant's
units are generally determined by the Compensation Committee. As of
December 31, 1999, a total of 280 units were granted to key officers of the
Company and 720 units were available for future grants. No compensation expense
was recognized by the Company pursuant to the Long Term Plan during the years
ended December 31, 1999 and 1998.

11. EMPLOYEE 401(k) SAVINGS PLAN

    The Company has a tax-deferred employee 401(k) savings plan covering
substantially all employees. Contributions by the Company are made at the
Company's discretion. No contributions have been made by the Company under this
plan. On December 9, 1999, the Board of Directors authorized the merger of
Sentry's 401(k) profit sharing plan (the "Sentry Plan") into the Company's
existing plan. The merger is effective as of January 1, 2000. Immediately prior
to the effective date of the merger, all participants in the Sentry Plan became
100% vested in their account balance under the Sentry Plan.

                                      F-17
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. RELATED PARTY TRANSACTIONS

    In July 1998 the Board of Directors approved the META Group, Inc./JMI Long
Term Incentive Compensation Plan (the "Long Term Plan") with a significant
retention feature for key management employees. The Company subscribed for up to
$4.0 million in limited partnership interests in the JMI Equity Side Fund, L.P.
(the "JMI Fund"), a venture capital fund managed by JMI Associates. The JMI Fund
will co-invest along with other funds affiliated with JMI Associates. The
Company has agreed to use the realized returns, if any, on the Company's
investment in the JMI Fund to fund payouts under the Plan to key management
employees. No compensation expense was recognized by the Company pursuant to the
Long Term Plan during the years ended December 31, 1999 and 1998.
Contemporaneously with the Company's subscription to the JMI Fund, JMI Partners,
L.P., an affiliate of the JMI Fund, became a full-service client of the Company.
In 1999 and 1998, the Company received $125,000 from JMI Partners, L.P. in
consideration of services and consulting. A director of the Company is a general
partner of JMI Partners, L.P., the general partner of JMI Equity Fund, L.P. and
an affiliate of JMI Associates. The director does not have a direct material
interest in the JMI Fund and does not sit on the Compensation or Audit
Committees of the Board of Directors. As of December 31, 1999 and 1998, the
Company invested $2,154,000 and $634,000, respectively, in the JMI Fund which is
included in other assets on the consolidated balance sheets.

    In October 1996, the Company entered into an agreement (the "Original
Agreement") with Rubin Systems, Inc. ("RSI"), a provider of IT and software
engineering measurement consulting. Under the Original Agreement, RSI provides,
on an exclusive basis, measurement research and analysis for use in the
Company's PEMS service. In June 1998, the Company and RSI entered into an
addendum to the Original Agreement whereby the Company distributes for RSI
certain published research products, primarily the Worldwide Benchmark Report (a
publication presenting facts and trend-line data concerning IT performance and
productivity, budgets and spending, emerging technologies and business
requirements compiled from a worldwide sample of IT organizations). The Company
recognized $3,411,000, $1,769,000 and $553,300 in revenues from the sale of RSI
derivative products during the years ended December 31, 1999, 1998 and 1997,
respectively. In exchange for the content provided by RSI, the Company paid
$825,500, $470,700 and $237,000 in royalties to RSI during the years ended
December 31, 1999, 1998 and 1997, respectively. RSI is wholly-owned by a
director of the Company.

    In March 1995, the Company entered into an exclusive strategic alliance
agreement with First Albany Corporation ("First Albany"), a financial services
firm. The agreement provides for the distribution of the Company's written
research and analysis, in its original form or as customized and expanded by
First Albany, to First Albany's financial services customers, which include many
institutional investors who are large IT users. The agreement restricts the
Company from marketing its services to any broker dealer or sell-side firm
offering services similar to those offered by First Albany. The Company is
permitted to market and sell Research and Advisory Services directly to First
Albany customers. This agreement is annually renewable by First Albany, subject
to attainment of specified minimum revenue targets. The Company recognized
$875,000, $750,000 and $616,500 in revenues from this arrangement during the
years ended December 31, 1999, 1998, and 1997, respectively. First Albany owns
209,500 shares of the Company's common stock as of December 31, 1999. A director
of the Company is also Chairman and Co-Chief Executive Officer of First Albany.

13. SEGMENT REPORTING

    The Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", during the fourth quarter of 1998. SFAS
No. 131 established standards for reporting information about operating segments
in annual financial statements and requires selected information

                                      F-18
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SEGMENT REPORTING (CONTINUED)
about operating segments in interim financial reports issued to stockholders. It
also established standards for related disclosures about products and services
and geographic areas. Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker, or decision making
group, in deciding how to allocate resources and in assessing performance. The
Company's chief operating decision making group is the Executive Committee,
which is comprised of the President and the executive officers of the Company.
The operating segments are managed separately because each operating segment
represents a strategic business unit that offers distinct products/services.

    The Company's operating segments consist of Research and Advisory Services,
Strategic Consulting and Published Research Products. Research and Advisory
Services provide comprehensive coverage of virtually all relevant IT and
business related issues faced by its clients through client/analyst interaction
and published conclusions and recommendations to the client's specific IT
requirements. Strategic Consulting provides custom consulting services tailored
to meet individual client requirements. Published Research Products offer a
variety of topic-specific reports designed to serve both as complements to the
Company's core services and as stand-alone deliverables that meet specific
assessment requirements.

    The accounting policies of the operating segments are the same as those
described in Note 2 except that the disaggregated financial results for the
Company's operating segments have been prepared using a management approach,
which is consistent with the basis and manner in which the Company's management
internally disaggregates financial information for the purposes of assisting in
making internal operating decisions. The Company evaluates performance based on
stand alone segment operating income, defined as the segment revenues less
segment cost of sales and corporate general and administrative allocations.
Management does not allocate corporate assets, depreciation and amortization,
non-operating income (interest income), or income taxes when measuring segment
results.

    Information by operating segment is set forth below (in thousands):

<TABLE>
<CAPTION>
                                                   RESEARCH AND                PUBLISHED
                                                     ADVISORY     STRATEGIC    RESEARCH    CONSOLIDATED
                                                     SERVICES     CONSULTING   PRODUCTS       TOTAL
                                                   ------------   ----------   ---------   ------------
<S>                                                <C>            <C>          <C>         <C>
YEAR ENDED DECEMBER 31, 1999
Revenues.........................................     $71,524      $20,844      $7,315        $99,683
Operating income.................................      10,529        3,219        (435)        13,313
Assets...........................................          --           --          --        113,450

YEAR ENDED DECEMBER 31, 1998
Revenues.........................................     $58,586      $ 9,404      $4,795        $72,785
Operating income.................................      10,320        1,881         137         12,338
Assets...........................................          --           --          --        112,187

YEAR ENDED DECEMBER 31, 1997
Revenues.........................................     $44,152      $ 5,214      $1,829        $51,195
Operating income.................................       7,440          330        (161)         7,609
Assets...........................................          --           --          --         89,453
</TABLE>

                                      F-19
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. SEGMENT REPORTING (CONTINUED)
INTERNATIONAL OPERATIONS:

    The Company sells its products internationally through a network of 35
independent sales representative organizations located primarily in Canada and
Europe. For each of the three years in the period ended December 31, 1999, net
sales to international sales representatives were $11,664,000, $8,990,000 and
$5,972,000, respectively.

14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

    The following table sets forth certain key interim financial information for
the years ended December 31, 1999 and 1998.

<TABLE>
<CAPTION>
                                                           FIRST      SECOND     THIRD      FOURTH
                                                          QUARTER    QUARTER    QUARTER    QUARTER
                                                          --------   --------   --------   --------
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                       <C>        <C>        <C>        <C>
1999:
Revenues:
  Research and advisory services........................  $15,808    $16,852    $18,600    $20,264
  Strategic consulting..................................    2,870      5,247      5,607      7,120
  Published research products...........................    1,427      2,012      1,272      2,604
                                                          -------    -------    -------    -------
    Total revenues......................................   20,105     24,111     25,479     29,988
                                                          -------    -------    -------    -------
Operating expenses:
  Cost of services and fulfillment......................   11,286     12,883     13,282     14,773
  Selling and marketing.................................    4,982      5,806      5,395      7,011
  General and administrative............................    1,793      2,080      2,006      2,477
  Depreciation and amortization.........................      593        659        683        661
                                                          -------    -------    -------    -------
    Total operating expenses............................   18,654     21,428     21,366     24,922
                                                          -------    -------    -------    -------
Operating income........................................    1,451      2,683      4,113      5,066
                                                          -------    -------    -------    -------
Net income..............................................  $ 1,309    $ 2,048    $ 2,454    $ 3,419
                                                          =======    =======    =======    =======
Net income per diluted common share.....................  $   .10    $   .18    $   .23    $   .31
                                                          =======    =======    =======    =======
Net income per basic common share.......................  $   .11    $   .19    $   .24    $   .34
                                                          =======    =======    =======    =======
</TABLE>

                                      F-20
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                                                           FIRST      SECOND     THIRD      FOURTH
                                                          QUARTER    QUARTER    QUARTER    QUARTER
                                                          --------   --------   --------   --------
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                       <C>        <C>        <C>        <C>
1998:
Revenues:
  Research and advisory services........................  $13,179    $13,805    $15,244    $16,358
  Strategic consulting..................................    1,076      1,705      1,992      4,631
  Published research....................................      887        950      1,218      1,740
                                                          -------    -------    -------    -------
    Total revenues......................................   15,142     16,460     18,454     22,729
                                                          -------    -------    -------    -------
Operating expenses:
  Cost of services and fulfillment......................    7,538      7,857      8,675     11,028
  Selling and marketing.................................    3,446      4,050      4,270      4,936
  General and administrative............................    1,520      1,437      1,764      2,032
  Depreciation and amortization.........................      447        453        458        536
                                                          -------    -------    -------    -------
    Total operating expenses............................   12,951     13,797     15,167     18,532
                                                          -------    -------    -------    -------
Operating income........................................    2,191      2,663      3,287      4,197
                                                          -------    -------    -------    -------
Net income..............................................  $ 1,648    $ 1,967    $ 2,356    $ 2,814
                                                          =======    =======    =======    =======
Net income per diluted common share.....................  $   .13    $   .16    $   .19    $   .22
                                                          =======    =======    =======    =======
Net income per basic common share.......................  $   .15    $   .17    $   .21    $   .24
                                                          =======    =======    =======    =======
</TABLE>

    The total of quarterly earnings per share may not equal the annual amount as
earnings per share is calculated independently for each quarter.

                                      F-21
<PAGE>
                                META GROUP, INC.
                     INDEX TO EXHIBITS FILED WITH FORM 10-K
                          YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
           EXHIBIT
           NUMBER           DESCRIPTION
    ---------------------   -----------
    <C>                     <S>
         2.1(1)(2)          Agreement and Plan of Merger by and among META Group, Inc.,
                              MG Acquisition Corporation and The Sentry Group, Inc.
                              dated as of September 23, 1998 ("Agreement and Plan of
                              Merger")

         2.2(1)             Amendment No. 1 to Agreement and Plan of Merger

         3.1(3)             Amended and Restated Certificate of Incorporation of the
                              Company

         3.2(3)             Amended and Restated By-Laws of the Company

         4.1(3)             Specimen certificate representing the Common Stock

         4.2(1)             Registration Rights Agreement dated as of October 20, 1998
                              by and among META Group, Inc. and the stockholders of The
                              Sentry Group, Inc. listed on the signature pages thereto

         4.3(1)             Escrow Agreement dated as of October 20, 1998 among META
                              Group, Inc., Peter A. Naber and State Street Bank and
                              Trust Company

         4.4(6)             Form of Common Stock Purchase Warrant (Immediate Vesting)
                              issued to stockholders of The Sentry Group, Inc. on
                              October 20, 1998

         4.5(6)             Form of Common Stock Purchase Warrant (Contingent Vesting)
                              issued to stockholders of The Sentry Group, Inc. on
                              October 20, 1998

        10.1(7)*            Amended and Restated 1995 Stock Plan

        10.2(4)*            Form of Incentive Stock Option Agreement under the Amended
                              and Restated 1995 Stock Plan

        10.3(4)*            Form of Non-Qualified Stock Option Agreement under the
                              Amended and Restated 1995 Stock Plan

        10.4(5)*            1995 Employee Stock Purchase Plan Enrollment Authorization
                              Form

        10.5(3)*            1995 Non-Employee Director Stock Option Plan

        10.6(4)*            Form of Non-Qualified Stock Option Agreement under the 1995
                              Non-Employee Director Stock Option Plan of the Registrant

        10.7(3)(2)*         Agreement between First Albany Corporation and the Company
                              dated March 30, 1995

        10.8(3)*            Restated and Amended 1989 Stock Option Plan, as amended

        10.9(3)*            Form of Incentive Stock Option Agreement under 1989 Stock
                              Option Incentive Plan

        10.10(3)*           Form of Certificate and Agreement under Restated and Amended
                              1989 Stock Option Plan

        10.11(3)*           1993 Stock Option and Incentive Plan, as amended

        10.12(3)*           Form of Certificate and Agreement under 1993 Stock Option
                              and Incentive Plan

        10.13(3)*           Form of Warrant under the Restated and Amended 1989 Stock
                              Option Plan and 1993 Stock Option and Incentive Plan

        10.14(3)            Form of International Sales Representative Agreement

        10.15(3)            Office Lease between International Business Machines
                              Corporation and the Company dated August 1, 1994
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
           EXHIBIT
           NUMBER           DESCRIPTION
    ---------------------   -----------
    <C>                     <S>
        10.16(6)*           Form of META Group, Inc./JMI Long Term Incentive
                              Compensation Plan

        10.17(7)*           Amended and Restated 1996 Equity Compensation Plan of The
                              Sentry Group, Inc.

        10.18(8)*           Employment agreement between META Group, Inc. and Larry R.
                              DeBoever dated as of October 15, 1996

        10.19(8)*           Promissory Note dated as of November 1, 1996 issued by
                              Larry R. DeBoever to META Group, Inc. in an aggregate
                              principal amount of $500,000

        10.20(8)*           Amended and Restated 1995 Employee Stock Purchase Plan

        10.21(9)(2)*        Application Productivity Strategies Development and Services
                              Agreement between META Group, Inc., and Rubin Systems
                              Incorporated and Howard Rubin, dated October 11, 1996 (the
                              "Rubin Agreement")

        10.22(9)(2)*        Addendum to Rubin Agreement dated October 21, 1997

        10.23(9)(2)*        Addendum to Rubin Agreement dated June 30, 1998

        10.24(9)(2)*        Addendum 3 to Rubin Agreement dated June 14, 1999

        10.25*+             Letter agreement dated as of February 2, 2000 between META
                              Group, Inc. and Larry R. DeBoever (with certain
                              information omitted)

        11.1+               Statement regarding computation of per share earnings

        21.1+               List of Subsidiaries

        23.1+               Consent of Deloitte & Touche LLP

        24.1+               Power of Attorney (see page 34)

        27.1+               Financial Data Schedule
</TABLE>

------------------------

(1) Incorporated herein by reference to the exhibits to the Company's Current
    Report on Form 8-K dated October 20, 1998 and filed on November 3, 1998
    (File No. 0-27280).

(2) Confidential treatment obtained as to certain portions.

(3) Incorporated herein by reference to the exhibits to the Company's
    Registration Statement on Form S-1(File No. 33-97848).

(4) Incorporated herein by reference to the exhibits to the Company's
    Registration Statement on Form S-8 (File No. 333-1854).

(5) Incorporated herein by reference to the exhibits to the Company's
    Registration Statement on form S-8 (File No. 33-80539).

(6) Incorporated herein by reference to the exhibits to the Company's Quarterly
    Report on Form 10-Q dated November 16, 1998 (File No. 0-27280).

(7) Incorporated herein by reference to the exhibits to the Company's
    Registration Statement on Form S-8 (File No. 333-68323).

(8) Incorporated herein by reference to the exhibits to the Company's Quarterly
    Report on Form 10-Q dated May 14, 1999 (File No. 0-27280)

(9) Incorporated herein by reference to the exhibits to the Company's Quarterly
    Report on Form 10-Q dated August 16, 1999 (File No. 0-27280)

*   Indicates a management contract or any compensatory plan, contract or
    arrangement.

+   Filed herewith.
<PAGE>
                                                                     SCHEDULE II

                                META GROUP, INC.
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 ADDITIONS
                                                       -----------------------------
                                                          CHARGED         CHARGED
                                         BALANCE AT    (CREDITED) TO   (CREDITED) TO                 BALANCE
                                        BEGINNING OF     COSTS AND         OTHER                     AT END
                                           PERIOD        EXPENSES        ACCOUNTS      DEDUCTIONS   OF PERIOD
                                        ------------   -------------   -------------   ----------   ---------
<S>                                     <C>            <C>             <C>             <C>          <C>
Year ended December 31, 1999:
  Allowance for doubtful accounts.....     $1,088         $  (415)                                   $  673
                                           ======         =======                                    ======
  Valuation allowance for deferred tax
    asset.............................     $2,142         $(1,939)(a)                                $  203
                                           ======         =======                                    ======

Year ended December 31, 1998:
  Allowance for doubtful accounts.....     $  828         $   260                                    $1,088
                                           ======         =======                                    ======
  Valuation allowance for deferred tax
    asset.............................     $1,142                         $1,000(b)                  $2,142
                                           ======                         ======                     ======

Year ended December 31, 1997:
  Allowance for doubtful accounts.....     $  751         $    77                                    $  828
                                           ======         =======                                    ======
  Valuation allowance for deferred tax
    asset.............................     $  849         $   343                          $50       $1,142
                                           ======         =======                          ===       ======
</TABLE>

------------------------

(a) Reflects the utilization in 1999 and the projected utilization of the
    Company's net operating loss carryforwards.

(b) Reflects the additional allowance related to the deferred tax assets
    acquired as part of the acquisition of The Sentry Group, Inc.